Key Takeaways
- The Second Circuit refused to enforce the NLRB’s 2022 Tesla decision, which subjected all employer dress codes, even partial restrictions, to strict scrutiny-like review.
- The Court mandated a return to balancing employer interests against employees’ Section 7 rights, consistent with Republic Aviation.
- The Second Circuit clarified that post-Loper Bright, courts review NLRB legal conclusions de novo and exercise independent judgment in deciding whether the agency has acted within its statutory authority.
On September 2, 2026, the Court of Appeals for the Second Circuit rejected the National Labor Relations Board’s 2022 Tesla, Inc. decision as the applicable standard for evaluating employer dress code policies. Siren Retail Corporation, D/B/A Starbucks Reserve Roastery v. National Labor Relations Board, No. 24-3168 (2d. Cir. 2026). Specifically, the Court held that the Board’s Tesla test, as applied, failed to properly balance employer and employee interests. This decision cuts against the rebuttable presumption that all mandated uniform codes violate the NLRA, as established by the NLRB in Tesla, Inc., 371 NLRB No. 131 (Aug. 29, 2022).
Background of the Dispute
In 2022, employees at the Starbucks Reserve Roastery in New York City wore black T-shirts bearing the “Starbucks Workers United” union logo during a national campaign to negotiate their first union contract. When management asked the employees to change into dress-code-compliant shirts, the union filed an unfair labor practice charge under Sections 7 and 8(a)(1) of the NLRA.
Following an investigation, the NLRB initiated administrative proceedings against Starbucks. Their complaint challenged three dress code provisions:
- The One-Pin Policy, which permitted employees to wear one reasonably sized union button or pin but prohibited multiple union buttons.
- The Issue-Pin Policy, which barred employees from wearing buttons or pins advocating political, religious, or personal issues.
- The Logo-Shirt Policy, which prohibited shirts with writings, designs, or logos not pre-approved by Starbucks.
An Administrative Law Judge initially recommended dismissing the allegation after determining the One-Pin Policy was “nearly identical” to the one-pin rule the court already determined not to be an unfair labor practice in NLRB v. Starbucks Corp. (Starbucks I). However, the ALJ applied the Board’s Tesla framework in determining that the other dress code restrictions were not narrowly tailored to serve their proffered circumstances.
In November of 2024, the NLRB issued a Decision and Order affirming the ALJ’s recommendations but reversed the ALJ’s dismissal of the One-Pin Policy allegation. The Board concluded that Starbucks violated the NLRA’s prohibition of unfair labor practices as to all charges. Starbucks filed a petition in the Second Circuit Court of Appeals.
The Second Circuit’s Decision
The Second Circuit first affirmed that the NLRB is entitled to deference on its factual findings post Loper-Bright, but that any legal conclusions are reviewed de novo.
The Second Circuit then held that the Supreme Court’s decision in Republic Aviation does not support the NLRB’s Tesla rule, which provides that all employer-mandated dress codes limiting an employee’s right to display union insignia are presumptively unlawful. Reasoning that, as found in Textile Workers Union of Am. V. Darlington Mfg. Co., an employer violates Section 8(a)(1) only when the interference with Section 7 rights outweighs the business justification for the employer’s action. This requires a balanced review of the employer’s justification for the restriction and the employee’s Section 7 rights. This balancing requirement is present even when a presumption of unlawfulness is allowed, such as where there is evidence of discriminatory motive for the policy. The Second Circuit, accordingly, declined to endorse Tesla’s narrow tailoring requirement, which places a strict, scrutiny-like burden on all employers to justify even facially neutral, partial dress code restrictions.
Likewise, the Court urged the consideration of the following factors:
- the extent of intrusion on employee Section 7 rights,
- whether the employer’s policy is facially neutral, nondiscriminatory, and consistently enforced,
- the context or circumstances underlying the intrusion when, on remand, the Board balances the employer and employee interests.
The Issue-Pin and Logo-Shirt policies were remanded to the Board for analysis under a standard consistent with the Court’s opinion, and the Court denied enforcement of the NLRB’s finding that the One-Pin Policy was an unfair labor practice.
Takeaways
The Second Circuit is now the second federal court to reject the use of the Tesla test, with the Fifth Circuit granting Tesla’s challenge to the 2022 decision which originally established the standard. While this does not overturn the NLRB’s policy, its own General Counsel has encouraged the Board to overrule Tesla.
This decision, coupled with the NLRB General Counsel’s memorandum, signals to employers that a balanced approach to dress code policies is preferred. While the Tesla standard remains policy for now, dress code policies that seek to restrict union insignia may soon no longer be a presumptive violation under Section 8(a)(1) of the NLRA.
Employers should still carefully tailor dress code policies to impose the least restrictive limitation to achieve their business objectives.
If you have questions about the impact of this decision on your organization or any other labor-related questions, please reach out to your local Dinsmore labor and employment attorney.