Washington DC - An independent US government agency has ruled against luxury electric carmaker Tesla Inc in a dispute over support for labor unions.

Tesla Inc's decision to restrict employees from wearing pro-union shirts was unlawful, the National Labor Relations Board (NLRB) ruled.

In a 2017 dispute between the luxury electric carmaker and the United Automobile Workers or UAW union, the board said the company violated labor law by restricting display of union insignia, including wearing union apparel.

In the ruling, Chairperson Lauren McFerran and Members Wilcox and Prouty found that it was unlawful for Tesla to maintain a policy requiring employees to wear a plain black T-shirt or one imprinted with the employer's logo. This prohibits employees from substituting a shirt bearing union insignia.

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In a statement, the independent federal agency reaffirmed longstanding precedent holding that employer attempts to impose any restriction on the display of union insignia, including by wearing union apparel, are presumptively unlawful, absent special circumstances that justify such a restriction.

The board said the employer has the burden to establish special circumstances that make the rule necessary to maintain production or discipline, but Tesla failed to establish special circumstances in this case.

In its latest ruling, the board overruled Wal-Mart Stores Inc 368 NLRB No. 146 (2019) that allowed the retail giant to limit employees from wearing pro-union insignia at work.

Wal-Mart Stores had previously held that the "special-circumstances" test applies only when an employer completely prohibits union insignia, and that lesser size-and-appearance restrictions on union insignia could be deemed lawful based on less compelling employer interests.

McFerran said: "Wearing union insignia, whether a button or a T-shirt, is a critical form of protected communication."

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"For many decades, employees have used insignia to advocate for their workplace interests – from supporting organizing campaigns, to protesting unfair conditions in the workplace – and the law has always protected them."

"With today's decision, the board reaffirms that any attempt to restrict the wearing of union clothing or insignia is presumptively unlawful and – consistent with Supreme Court precedent – an employer has a heightened burden to justify attempts to limit this important right."

The NLRB had reportedly ruled earlier that Tesla CEO Elon Musk violated labor laws with his tweet regarding Tesla workers' stock options.