As discussed in our recent article, the introduction of SB 399 in California (approved and added as California Labor Code section 1137) sparked significant discussion and concern among California employers with union employees. The legislation, which became effective January 1, 2025, restricts so-called “captive audience meetings” by prohibiting employers from discharging or disciplining employees for refusing to attend mandatory employer-sponsored meetings. Many employers believe the law unnecessarily restrains their ability to communicate effectively and transparently with employees about important issues.
In response to SB 399, the California Chamber of Commerce and the California Restaurant Association filed a federal lawsuit in the United States District Court for the Eastern District of California on December 31, 2024 (the “Lawsuit”). The Lawsuit challenges the constitutionality of SB 399, arguing it infringes on employers’ free speech rights and is otherwise preempted by the National Labor Relations Act (“NLRA”). On February 11, 2025, the Liberty Justice Center and California Justice Center filed a second federal lawsuit in the same court, raising similar constitutional arguments (“Second Lawsuit” and collectively “the Lawsuits”). 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. Among others, the GC Memo rescinded prior federal guidance concerning the right to refrain from captive audience and other mandatory meetings under the NLRA, GC 22-04.
The California Worker Freedom from Employer Intimidation Act
SB 399, or the California Worker Freedom from Employer Intimidation Act (the “California Act”), prohibits employers from taking adverse actions against employees who choose not to attend meetings where opinions on religious or political matters, including unionization, are expressed. Previously, employers were permitted to require employee attendance at such meetings. The California Act is currently enforced by the Division of Labor Standards Enforcement and is ostensibly designed to protect employees from presumably coercive tactics that could influence their decisions regarding union policies.
The California Act follows a larger trend among several states that have enacted similar captive audience bans.
The Constitutional Challenge to the California Act
The Lawsuits in the Eastern District of California challenge the California Act on essentially 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. Specifically, by restricting speech on “matters relating to elections for political office, political parties, legislation, regulation, and the decision to join or support any political party or political or labor organization,” the Lawsuits argue that the California Act is overbroad and constitutes unconstitutional content-based discrimination aimed at chilling employers’ speech. The Lawsuits also claim the California Act will potentially leave workers without a full understanding of 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. Specifically, the Lawsuits argue that the California Act conflicts with and intrudes on an area that the federal government has decided to exclusively regulate, as evidenced by NLRA Section 8(c), which protects employers’ rights to express views on unionization, provided there are no threats or promises of benefits.
The Lawsuits ask for a temporary and permanent injunction blocking enforcement of the California Act.
Federal Law - The Looming NLRA Issue Under the NLRB
On November 13, 2024, the NLRB overturned decades of precedent by finding that requiring employees “to attend a meeting at which the employer expresses its views on unionization” violates the NLRA. That NLRB ruling was appealed and is pending before the United States Court of Appeals for the Eleventh Circuit.
This NLRB ruling and its applicability to state-sponsored “captive audience” meeting ban laws, including the California Act, may be short-lived once the five-member NLRB regains a Republican majority. However, the NLRB currently lacks a quorum after Trump fired former NLRB Member, Gwynne Wilcox, leaving the NLRB with one Democrat, one Republican, and three vacancies. The termination of former Member Wilcox is currently being litigated.
In addition, on February 14, 2024, the new Acting General Counsel of the NLRB signaled a new policy direction for federal labor law under the Trump administration by issuing GC Memo 25-05, rescinding over a dozen policies endorsed by previous leadership, including GC Memo 22-04 concerning captive audience meetings. (We discussed GC Memo 25-05 here.) While GC memos are not binding law, they act to inform Regional NLRB offices of the General Counsel’s priorities in enforcing the NLRA. Significantly, GC Memo 25-05 does not reverse the current application of the NLRB’s November 13, 2024 decision concerning captive audience meetings, but it does indicate a new NLRB may view the current rule of federal labor law differently.
Key Takeaways for California Employers
The outcome of the Lawsuits are uncertain and the NLRB is in a state of flux. California employers should reassess meeting policies and practices and develop an approach that makes sense for their individual business and risk profile given the current state and federal law considerations. California employers should monitor developments in this area, and companies with questions concerning SB 399 should contact experienced labor counsel.