California employers are in limbo over mandatory captive rules – two federal lawsuits challenge SB 399, and a looming issue before the NLRB.
As we discussed in our article, the introduction in California of SB 399 (approved and added to California Labor Code Section 1137) has sparked a lot of discussion and concern between California employers and union employees. The legislation, which took effect on January 1, 2025 restricts “captive audiences meetings” by prohibiting employers to discharge or discipline employees for refusing mandatory employer-sponsored meeting. The California Chamber of Commerce, along with the California Restaurant Association, filed a federal suit in the United States District Court of the Eastern District of California against SB 399 on December 31, 2024. The Lawsuit challenges SB 399’s constitutionality, arguing that it violates employers’ free speech rights. It also argues that the National Labor Relations Act (NLRA) preempts SB 399. The Liberty Justice Center and California Justice Center, in a second federal suit filed on February 11, 2025 in the same court with similar constitutional arguments (the “Second Lawsuit”, and collectively, “the Lawsuits”), sought to enjoin SB 399 and restore employer free speech rights across the state of California. The Lawsuits seek to enjoin SB 399 and restore employer free speech rights across the state of California.
Relatedly, on February 14, 2025, the Acting General Counsel of the National Labor Relations Board (“NLRB”) William B. Cowen issued his first General Counsel Memorandum (“GC Memo”) GC 25-05, rescinding multiple policies issued by the previous NLRB General Counsel. The GC Memo, among other things, rescinded previous federal guidance regarding the right to refuse captive audience and mandatory meetings under NLRA GC 22-04. The California Worker Freedom from Employer Intimidation Act
SB399, or California Worker Freedom from Employer Intimidation Act, prohibits employers from taking any adverse action against employees who refuse to attend meetings in which opinions on religious and political matters, such as unionization, are expressed. The California Act is enforced by the Division of Labor Standards Enforcement and was designed to protect employees from coercive tactics that could influence their decisions regarding union policies. The Constitutional Challenge to the California Act
The Lawsuits filed in the Eastern District of California are challenging the California Act primarily on two grounds.
First
, the Lawsuits argue the California Act violates the First and Fourteenth Amendments of the United States Constitution.
Second
, the Lawsuits argue the California Act is preempted by the NLRA.The Lawsuits contend the California Act unfairly targets employers’ viewpoints on political matters by regulating the content of their communications and suppressing their ability to speak freely, in violation of the First and Fourteenth Amendments. The Lawsuits claim that by restricting speech in “matters related to elections for political offices, political parties and legislation, regulation and the decision to support or join any political party, political or labor organization,” California Act is unconstitutional and content-based discrimination. The Lawsuits claim that the California Act could leave workers unable to fully understand the implications of unionization. Additionally, the Lawsuits argue the California Act is preempted by the NLRA, as the NLRA already provides a comprehensive framework for labor relations. Federal Law – The Looming NLRA issue Under the NLRBOn Nov. 13, 2024, NLRB ruled that requiring employees to “attend a meeting where the employer expresses their views on unionization” is a violation of the NLRA. The NLRB’s ruling is currently being appealed to the United States Court of Appeals, Eleventh Circuit. The NLRB is currently without a quorum, after Trump fired former NLRB member, Gwynne Willcox. This leaves the NLRB with only one Democrat and one Republican. The termination of former Member Wilcox, is currently litigated.In additional, on February 14, 2020, the new Acting NLRB General Counsel signaled a change in policy direction under the Trump administration, by issuing GC Memo 25, which rescinded over a dozen previous policies, including GC Memo 22,-04 regarding captive audience meetings. (We discussed GC Memo 25,05 here. While GC Memos are not law, they do inform Regional NLRB Offices of the General Counsel’s priorities for enforcing NLRA. GC Memo 2505 does not reverse current application of NLRB’s decision of November 13, 2024 concerning captive audience meetings. However, it does suggest that a new NLRB could view the current rule in federal labor law differently.
Key Takeaways For California Employers
The outcome is uncertain and the NLRB has a flux. California employers should reassess their meeting policies and practices, and develop a strategy that is appropriate for their business and risk profile in light of the current state and federal laws. California employers should keep an eye on developments in this field, and companies that have questions about SB 399 can contact labor counsel.
