Hunton Employment & Labor Perspectives

On May 31, 2024, the United States Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”) partially overturned a decision issued by the National Labor Relations Board (the “Board”) in Absolute Healthcare d/b/a Curaleaf Arizona v. National Labor Relations Board. The D.C. Circuit held that portions of a Board decision finding that an employer committed unfair labor practices in terminating an employee for poor performance who engaged in union organizing activities were not supported by substantial evidence. The D.C. Circuit’s decision emphasizes considerations that may be relevant in evaluating the lawfulness of termination events under the National Labor Relations Act (the “Act”), particularly when such events are related to employees that have engaged in union-related activity.

The employer, Absolute Healthcare, doing business as Curaleaf (“Curaleaf”), operates medical marijuana dispensaries throughout the nation. This case arose when the Board charged Curaleaf with four violations of the Act, which included unlawfully discharging an employee for engaging in union-related activity. The employee in question worked as a “budtender” for Curaleaf and was responsible for dispensing medical marijuana in compliance with state law requirements, logging the amounts of marijuana dispensed, handling cash associated with transactions, and managing a cash register drawer. Curaleaf terminated the employee in accordance with its four-step progressive discipline policy when the employee’s register drawer was short $20 at the end of a shift after Curaleaf had issued her a verbal warning, a written warning, and a final written warning for committing similar errors in handling transactions.

Notably, the employer became aware approximately one month prior to terminating the employee at issue that the employee was trying to unionize the Curaleaf facility where she was employed. In response to learning of these efforts, Curaleaf held two mandatory information meetings to discuss unionization, during one of which a Curaleaf human resources director referenced the employee’s union organizing efforts.

Considering these facts, the Board affirmed the decision of the Administrative Law Judge (“ALJ”), holding that Curaleaf terminated the employee out of anti-union animus. In arriving at this conclusion, the Board also relied upon evidence Curaleaf presented regarding the only other employee it terminated under its four-step progressive discipline policy. The evidence established Curaleaf did not terminate the comparator employee until he had committed seven separate cash-handling violations and received three formal warnings. The Board reasoned that Curaleaf treated the comparator, who did not engage in union-related activity, more leniently than the employee in question on the basis of anti-union animus directed toward the latter employee.

In its decision, the Board separately affirmed the ALJ’s findings that Curaleaf committed three other violations of the Act related to statements made by Curaleaf’s human resources director during the two unionization information sessions. The Board’s order required Curaleaf to reinstate the terminated employee with backpay, to read aloud a notice of the unfair labor practice findings to its employees, and to grant the union access to the relevant Curaleaf facility any time the company spoke to its employees about unionization.

The D.C. Circuit overturned the portion of the Board’s decision related to the termination, finding on its review that the unlawful termination decision was not supported by substantial evidence. The D.C. Circuit explained that Curaleaf strictly adhered to its progressive discipline policy, emphasizing that Curaleaf allowed the employee every opportunity to correct her mistakes by issuing disciplinary warnings in accordance with the policy despite the fact that the policy granted the company discretion to escalate any violation to a termination if  deemed appropriate. The court further highlighted as evidence that Curaleaf did not harbor anti-union animus against the terminated employee that several of the employee’s cash-handling violations were particularly egregious, including one that was described as “the most horrendous transaction” one of the employee’s managers had seen in his half-decade tenure with the company.

In line with its holding, the D.C. Circuit reversed the Board’s order requiring Curaleaf to reinstate the employee with backpay. Likewise, the D.C. Circuit vacated the portion of the Board’s order imposing the notice-reading and union-access remedies, reasoning that the Board’s sole rationale for ordering the remedies was based on its reversed finding that terminating the employee constituted a violation of the Act. 

The D.C. Circuit’s decision highlights several key factors that courts may consider in determining whether an employer has acted unlawfully in terminating an employee engaged in union activity. These factors include the employer’s adherence to established discipline policies, both in the present and in past cases, as well as the employer’s exercise of discretion, or lack thereof, in applying the policy. Employers should keep these considerations in mind when facing difficult decisions regarding employee discipline, particularly where discretionary decisions may deviate from past disciplinary practices.