New NLRB Decision Forces Employers to Scrutinize Policies Under New Employee-Friendly Standard

Employers thoughtfully create employment policies to set clear expectations for their employees. These policies should be drafted with an additional audience in mind: an increasingly interested National Labor Relations Board (the “Board”).

On August 3, 2023, the Board reversed its own 2017 decision and created a new framework for evaluating whether a written employment policy constitutes an unfair labor practice in violation of the National Labor Relations Act (“NLRA”). The employee-friendly framework within the Board’s new Stericycle, Inc. decision makes an employment policy presumptively unlawful if the policy could be reasonably interpreted to chill an employee’s rights under the NLRA. That interpretation must be made from the viewpoint of a lay employee. Rebutting that presumption will not be easy: an employer can only do so by proving that the policy advances a legitimate, substantial business interest and that the employer cannot advance that interest with a narrower rule.

While Board decisions typically only concern unionized workplaces, this decision affects any workplace with written employment policies regardless of the presence of a union. This is yet another action from the Board that affects all employers, similar to its recent scrutiny of non-compete agreements and confidentiality and non-disparagement provisions in severance agreements.

Employers should reevaluate their employment practices in light of this new framework. Employers should err on the side of more narrowly construed policies rather than broad or intentionally ambiguous policies. Additionally, employers should adopt an additional prophylactic policy explicitly stating the employer’s policies should not be interpreted as restricting NRLA rights.

Legal Background

Both union and non-union employees have rights under Section 7 of the NLRA. Section 7 rights include the right to form, join, or assist unions and the right to join together as employees to advance their interests as employees. An employer commits an unfair labor practice in violation of the NLRA by interfering with, restraining, or coercing employees in exercising Section 7 rights. Clearly, an employer’s policy to terminate all employees who join a union constitutes an unfair labor practice. However, the analysis becomes more challenging when a broad, facially neutral policy may prohibit the exercise of Section 7 rights. For example, an employer may adopt a broad confidentiality rule that forbids employees from discussing “confidential employee information.” If “confidential employee information” covers what the employer pays each employee, that policy may restrict Section 7 rights because Section 7 protects employees who discuss their compensation with their fellow employees.

The Board’s standard for evaluating facially neutral policies has changed over the years. Under the Board 2017 Boeing decision, the Board sought to increase clarity regarding when neutral policies run afoul of Section 7 rights by adopting categorical rules. For example, rules banning workplace recordings were presumptively lawful while rules requiring confidentiality about wages were unlawful. The Boeing decision in turn had substantially revised a previous Board decision, Lutheran Heritage Village-Livonia. 

The Board Adopts More Challenging Standard for Employers

In Stericycle, the Board moved away from Boeing’s predictable, categorical approach in favor of a more nebulous burden-shifting approach similar to its prior Lutheran Heritage standard.

Under the Stericycle standard, the Board must first prove that the challenged employment policy has a “reasonable tendency to chill” employees from exercising Section 7 rights. Importantly, this “reasonable tendency” is taken from the perspective of a lay employee who seeks to engage in Section 7-protected activity, rather than from a purely objective standard. If this standard is met, the policy is presumptively unlawful.

An employer may only rebut this presumption if the employer proves that the rule advances a legitimate and substantial business interest, and that the employer cannot advance that interest with a narrower rule. Such a standard is not likely to be easily met.

What’s the Danger and What Employers Should Do

The shift from the predictable standard in Boeing to the more rigorous standard in Stericycle puts increased scrutiny on all employer policies. This scrutiny has real teeth: if an employee is terminated pursuant to an overly broad policy, he could challenge that termination at the Board. If successful, the Board could order the employer to reinstate the terminated employee and pay him any lost wages. That penalty is costly in both dollars and headaches.

To mitigate this danger, employers should reevaluate written policies and err on the side of more narrowly construed policies rather than broad or intentionally ambiguous policies. Certain types of policies are more likely to draw the Board’s attention and ire, such as policies on workplace civility and respect, social media, cameras or mobile phone use, profanity, non-displacement, and confidentiality.

Employers also should adopt a policy that details employees’ rights under Section 7. That policy should state that no rule adopted by the employer should be interpreted as restricting Section 7 rights. Such a policy will strengthen an employer’s position that its policies cannot reasonably be interpreted as chilling an employee’s Section 7 rights. While the Board’s decision in Stericycle was silent on the value of these prophylactic policies, the Board’s General Counsel has taken the position that such policies should create a presumption that an employer’s rules are lawful.

Daniel R. Fishman is an associate at Morgan, Brown & Joy, who focuses his practice on guiding the often complex employer-employee relationship, including handling non-competition agreements and enforcement, discrimination, harassment, employee leave arrangements, and more.

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