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The National Labor Relations Board (Board) recently notched a win when the U.S. Court of Appeals for the Fifth Circuit found that a staffing company committed an unfair labor practice by terminating its employee when she complained directly to one of the staffing company’s customers — the entity for which the employee provided services — about her wages after being instructed to bring complaints directly to her employer. Capstone Logistics, LLC v. N.L.R.B., 122 F.4th 194 (5th Cir. 2024). Notably, the Fifth Circuit held there was “sufficient evidence in the record to support the Board’s finding that a motivating factor” for the employee’s termination was the employer’s “belief that she had raised group employment complaints” to the employer’s customer. Id. at 204 (emphasis added). In short, the employer’s perception that a terminated employee engaged in protected concerted activity — regardless of whether the employee actually engaged in such activity — is sufficient to support an unfair labor practice charge under Section 8(a)(1) of the National Labor Relations Act.

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The charging party’s complaints to her employer and its clients

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Capstone Logistics, LLC is a staffing company that provides various services to companies, which Capstone calls “partners.” Joyce Henson, a Capstone employee, provided services to one of these partners as a lead auditor. During a meeting with management from both Capstone and the partner, Henson raised concerns about the auditors’ safety and pay. After the meeting, Henson raised concerns directly with the partner, through a conversation with the partner’s Director of Distribution and Senior Manager, about her own pay and mentioned that she had contacted one of the partner’s customers about her concerns. The partner’s Director of Distribution complained to Capstone’s Vice President of Operations about Henson coming to him directly, as opposed to Capstone’s management, regarding Capstone-related matters.

Days later, Henson again raised concerns pertaining to auditors in a meeting with other auditors and Capstone management. After this meeting, Henson once again had a separate meeting, this time with Capstone management, about her own pay. At this meeting, Capstone’s VP of Operations told Henson that Capstone would look into the matter, and that any Capstone-related concerns should be brought to Capstone and not to Capstone’s partner.

That same day, Henson again contacted&nbsp;the partner’s&nbsp;customer through LinkedIn, complaining about auditor pay. In this message, Henson named both the partner’s Director of Distribution and Senior Manager and provided a phone number where they could be reached. The partner’s Director of Distribution and Henson spoke that day. After his conversation with Henson, the partner’s Director of Distribution called and spoke with Capstone’s VP of Operations for about one minute. Capstone’s VP of Operations terminated Henson the next morning for “disruption of business” caused by going “to the partner with some concerns” after being told to come to Capstone with Capstone-related matters. Capstone Logistics, 122 F.4th at 198.

The Board’s and Fifth Circuit’s holdings

The Board found that Capstone committed an unfair labor practice by terminating Henson’s employment after she purportedly engaged, or was perceived as engaging, in protected concerted activity by: (1) sending a LinkedIn message to the partner’s customer regarding compensation, and (2) seemingly raising group concerns to the partner’s Director of Distribution. Capstone Logistics, 122 F.4th at 200. The Fifth Circuit rejected the Board’s finding as to the LinkedIn message, determining that the Board relied on “inferences upon inferences” when attributing knowledge of the message to Capstone, but upheld the finding as to Henson’s conversation with the partner’s Director of Distribution, holding there was sufficient evidence to support the Board’s conclusion that Henson’s termination was “motived by Capstone’s belief that Henson had raised group employment complaints” during an interaction with the partner’s Director of Distribution. Id. at 201-02.

Henson’s clear violation of her employer’s directive to raise concerns directly with it, rather than its customer, was substantively discussed only by the dissenting judge, who noted Capstone’s customer, the partner, complained about an interaction with Henson, and that her “unpleasant discussion, about her own issues” resulted in her termination, not her discussion regarding group issues. Id. at 205.

Despite the lack of direct evidence demonstrating Henson raised anything other than personal complaints to the partner’s Director of Distribution in her separate meeting with him, the Fifth Circuit’s majority agreed with the Board that Capstone’s VP of Operations, who carried out Henson’s termination, “had good reason to believe that Henson raised group complaints” to the partner’s Director of Distribution because she had raised group complaints to Capstone officials, including the VP of Operations, earlier that day. Id. at 204. The court concluded there was “sufficient circumstantial evidence to support the Board’s inference that [Capstone’s VP of Operations] at least suspected protected concerted activity.” Capstone Logistics, 122 F.4th at 204 (emphasis added).

Alleged protected concerted activity … employers beware

Crucially, it did not matter whether Henson actually engaged in protected activity when complaining to the partner’s official; rather, Henson’s termination as a result of Capstone’s inferred&nbsp;suspicion&nbsp;that Henson engaged in concerted protected activity was sufficient to substantiate a violation of Section 8(a)(1). The Fifth Circuit’s decision should serve as a reminder to employers that they should recognize protected concerted activity, or potential protected concerted activity, when considering taking an adverse action against employees based on their interactions with others.

Perception Versus Reality: Fifth Circuit Backs Board’s Unfair Labor Practice Finding on Termination Based on ‘Perceived’ Section 7 Activity