Legal Updates

NLRB Decision Raises Stakes For Employers In Enforcing Workplace Rules

The National Labor Relations Board (the “Board” or “NLRB”) recently issued a decision adopting a new standard for evaluating employer work rules that may conflict with employees’ rights to engage in concerted activity protected under Section 7 of the National Labor Relations Act (the “Act”).

Under this decision, Stericycle, Inc., the Board will now evaluate such rules from the “perspective of an employee who is subject to the rule and economically dependent on the employer,” to ensure that such rules do not improperly restrain employees’ exercise of Section 7 rights. The decision signals a notable shift by the Board toward a more employee-friendly standard for evaluating employer work rules.

Background

Under Section 7 of the Act, employees – whether unionized or non-unionized – have the right to engage in concerted (i.e., joint) activity aimed at improving the terms and conditions of their employment. This includes, for example, initiating or supporting a union organizing campaign, as well as speaking with co-workers for the purpose of garnering their support for requested changes in terms and conditions of employment.

As the Board has long recognized, employees’ exercise of Section 7 rights may conflict with various employer policies governing employee conduct, such as policies on civility, non-disparagement, social media use, and video/audio recordings in the workplace, as well as policies directing employees to keep internal investigations confidential or raise work-related complaints only through specified channels.

The Board’s standard for determining whether such work rules impermissibly “chill” employees’ right to exercise their Section 7 rights has varied over the years. In a 2004 decision, Lutheran Heritage, the Board held that a facially neutral work rule violates the Act if employees could “reasonably construe” the language of the rule to restrict their rights under Section 7.

In 2017, the Board overruled Lutheran Heritage in its Boeing Co. decision. In Boeing, the Board adopted a balancing test under which the burden placed on employees by a work rule was weighed against an employer’s legitimate business interests in enforcing it. In addition, Boeing put employer rules into three general categories: (1) rules that were always lawful to maintain, (i.e., did not interfere with Section 7 rights); (2) rules that were looked at on a case-by-case basis; and (3) rules that were always unlawful to maintain.

Critics of the Boeing decision expressed concern that the Board had failed to account for employees’ economic dependency on an employer and had given more consideration to the rights of employers than those of employees. These considerations underlie the NLRB’s recent Stericycle decision.

New Standard

With the Stericycle decision, the Board has eliminated its previous category of presumptively lawful work rules. Instead, the Board will now look at each work rule on a case-by-case basis, assessing its likely impact upon Section 7 rights from the perspective of an economically dependent employee. The Board reasons that an employee who is economically dependent will be wary of losing their job and therefore may construe a work rule broadly.

In this regard, the Board stated that it will examine the “specific wording of the rule, the specific industry and workplace context in which it is maintained, the specific employer interests it may advance, and the specific statutory rights it may infringe.”

Under that analysis, the Stericycle decision adopted a burden-shifting framework for determining whether an employer rule is unlawful:
 

• The Board will first consider whether “there is no reasonable reading of the rule [under which] it prohibits Section 7 activity.” If so, “that is the end of the inquiry: the rule is lawful.”

• If, instead, the NLRB General Counsel demonstrates that an employee could “reasonably interpret the rule to have a coercive meaning,” the rule is presumed to be unlawful.

• If the rule is presumed unlawful, the employer then has the burden of rebutting the presumption by proving that “the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.”

• Finally, if the employer is able to establish such a “legitimate and substantial business interest,” the rule will be deemed lawful.

Additionally, the Board announced that its decision would be retroactive, meaning that even if an employer changes its workplace rules in light of Stericycle, it may still be faced with an unfair labor practice charge based on rules that were previously in place.

The dissent in Stericycle argued that the new standard “inherently privileges employee rights” over those of employers. In particular, by requiring an employer to prove that a more narrowly tailored rule would be inadequate, the Stericycle decision establishes a stringent standard that an employer must meet in order to justify a workplace rule.

Implications For Employers

The new standard announced in Stericycle seems to go even further than the former Lutheran Heritage standard in its deference to employees’ Section 7 rights. While the Stericycle majority admitted that it did “not expect [the] new standard to provide complete certainty and predictability in this area of the law,” common employer policies now seem much more vulnerable to challenge under the NLRA.

With these points in mind, we suggest that employers:
 

• Carefully review their workplace rules and handbook policies and, in conjunction with experienced labor counsel, consider whether such policies should be revised in light of Stericycle.

• Conduct trainings to ensure that managers and HR personnel are aware of any such policy changes.

• Keep an eye out for additional guidance on these issues from the NLRB.

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If you have questions about the Stericycle decision and its impact upon work rules and handbook policies, please feel free to reach out to one of our experienced labor attorneys.