?Employee resource groups (ERGs), also known as affinity groups, are employee-driven groups focused on a shared and often protected characteristic, life experience or interest. These groups have proliferated, with roughly 90 percent of Fortune 500 companies, along with a growing number of mid-size and small companies, offering ERGs. Lauded for positive business, professional and personal benefits, ERGs have become an asset across all types of work environments.
This article explores the benefits, potential legal pitfalls and considerations specifically for ERGs in unionized workforces and offers practical ways for employers to implement effective ERGs while minimizing associated risks.
ERGs Benefit Employers and Employees
ERGs offer employers a competitive edge by serving as a tool for attracting, recruiting and retaining a diverse workforce and cultivating leaders. ERGs can also aid employees in developing skills and knowledge critical to an employer’s business, which can enhance the company’s products and services. More broadly, ERGs are a proactive method of promoting diversity and an inclusive work environment while positively contributing to a company’s internal and public reputations.
Likewise, employees who participate in ERGs report feeling heard, valued, supported and included. In this way, ERGs can serve as a safe space for open dialogue and learning. This genuine sense of belonging and community can help employees grow professionally and personally while boosting their overall morale. In addition, ERGs offer convenient networking and mentoring opportunities to help drive employee advancement.
Legal Pitfalls
However, accompanying the many benefits of ERGs are potential legal pitfalls, broken into three categories:
- Traditional labor law issues: ERGs can present unique challenges stemming from the National Labor Relations Act (NLRA), whether the company is unionized or not.
- Wage and hour concerns: The Fair Labor Standards Act and local laws may require compensating hourly employees for time spent on ERG activities, although an employer may avoid having to pay compensation if attendance is outside the employee’s regular work hours; attendance is voluntary; the activity is not directly related to the employee’s job; and the employee does not perform any productive work during the activity.
- Discrimination, harassment and retaliation claims: Employers must be attentive to the various laws aimed at protecting employees from discrimination, harassment and retaliation when making decisions regarding ERGs, including ensuring that all ERGs are inclusive of all who wish to participate, monitoring the type of ERGs that employees may form, and responding to complaints raised during ERG activities in accordance with company policy.
This article focuses on the first category: traditional labor law issues.
Employers risk running afoul of federal labor law if they create or treat an ERG like a labor organization and then dominate or interfere with it. NLRA Section 2(5) defines a “labor organization” as any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment or conditions of work. “Dealing with” is a broader concept than negotiating or collective bargaining.
Because employers often contribute funds to, sponsor or otherwise support ERGs, there is a risk that the National Labor Relations Board or courts could find an NLRA violation involving them. This has occurred when an employer has established and funded the group and determined its purpose and structure, and the group then engages in bilateral back-and-forth discussions with management over working conditions or wage/benefit issues, with management having significant control over the group’s agenda.
Steps for Implementing Effective ERGs and Mitigating Risks
By taking several proactive steps, employers can maximize the tremendous potential benefits of ERGs and limit legal risks.
First, employers should prepare a written policy with the following provisions:
- Purpose of ERGs as aligned with the company’s business objectives.
- Department/individual responsible for approving and administering ERGs.
- Disclaimer denying that ERGs represent employees regarding terms and conditions of employment or will deal with terms and conditions.
- Statement that the policy does not replace, amend or supplement any terms or conditions of employment in collective bargaining agreements.
- Disclaimer prohibiting exclusion of any employee based on any protected characteristic.
- Statement that the company’s anti-discrimination and anti-harassment policies and time-keeping policies are applicable to ERG activities during work time.
- Disclaimer that the ERG is not permitted to infringe upon rights under the NLRA or replace the company’s HR reporting processes.
- Examples of legitimate business purposes for ERGs, such as promoting employee personal development, recruitment, retention, cultural awareness and diversity.
- ERGs that will not be recognized—for example, groups promoting political positions, excluding certain employees, not aligned with the company’s business objectives or not promoting employment-related purposes.
- Criteria and procedure to form an ERG—for example, employee eligibility, minimum member threshold, and written proposal containing mission statement, anticipated programming, preliminary budget, organization structure and decision-making processes.
- The company’s role in coordination, oversight and direction, minimizing governance when needed for NLRA compliance.
- Applicable rules and responsibilities for ERGs—for example, open membership regardless of protected characteristics; written budgetary approval required; regular meetings and programming; quarterly reports to the company; circulating applicable anti-discrimination/anti-harassment, time-keeping and other policies to members; reporting complaints of discrimination or harassment; and adhering to time-keeping requirements.
Other steps include:
- Conduct training for ERG leaders and managers to ensure compliance with company guidelines and applicable laws.
- Refrain from engaging in discussions with ERGs or their members about the terms and conditions of employment, including wages, rates of pay and hours of employment.
- Treat all company-recognized ERGs equally.
- Equally enforce company anti-discrimination and anti-harassment policies within ERGs.
- Work with legal counsel to address the full array of legal risks associated with ERGs.
Harry I. Johnson III and Larry L. Turner are partners with Morgan, Lewis & Bockius LLP in Los Angeles and Philadelphia, respectively. This article was written with assistance from Lakeisha Andress and Mikaela Masoudpour, associates with Morgan, Lewis & Bockius LLP in Dallas and Chicago, respectively.