Time for Handbook Review! NLRB Adopts New Standard for Workplace Rules

On August 2, 2023, the National Labor Relations Board (NLRB) adopted a new standard for evaluating the legality of workplace rules under the National Labor Relations Act (NLRA). Employers in both unionized and nonunionized settings should review their employee handbooks and policies to ensure compliance with the new standard.

Review of the Old Standard

As the Board noted, it’s well established that the NLRA’s dominant purpose is to protect employees’ right to organize for mutual aid without employer interference. In interpreting the legality of workplace rules, the Board has historically balanced the weight of employees’ NLRA rights against employers’ rights to establish work rules and maintain discipline in their establishments.

The Board established the most recent standard for interpreting work rules under the NLRA in the 2017 decision in Boeing Co. In that case, the majority held that when the Board decided the lawfulness of an employer’s maintaining a “facially neutral” work rule, it would apply a balancing test.

The balancing test weighed the employer’s legitimate reasons for the work rule and balanced them against whether the rule could also have a chilling effect on employees’ rights to organize or engage in concerted activities. Under the Boeing standard, the Board was reluctant to find an overly broad rule unlawful absent specific facts that showed a chilling effect on employees’ NLRA rights.

New Standard

In the recently decided case Stericycle, the Board overturned the Boeing standard and adjusted the balance in favor of employees. In Stericycle, the Board was critical of overly broad policies that could chill employees from exercising their NLRA rights.

First, it determined a rule is presumptively unlawful if it could possibly be interpreted to limit employee rights. In the Board’s view, a policy may be unlawful even if it had an alternate interpretation that was consistent with employees’ NLRA rights and the employer interpreted the rule consistent with those rights. The Board may nonetheless find a rule invalid based on potential interference with activities that weren’t considered by the employer when the handbook or policy was drafted.

Under the new standard, the NLRB general counsel must show a rule has a reasonable tendency to chill employees from exercising their rights. The Board clarified it would interpret the rule from the perspective of an employee who is subject to the rule and economically dependent on the employer. The Board found that ambiguous rules would be interpreted against the employer.

An employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that it’s unable to advance the interest with a more narrowly tailored rule. It’s important to note the Board will apply its new Stericycle standard retroactively. Stericycle, Inc., 372 NLRB No. 113 (2023).

Bottom Line

The Stericycle decision is the most recent employee-friendly decision issued by the NLRB. You should review existing handbooks and policies to comply with the new Stericycle standard because the Board noted that overly broad policies will be found unlawful. However, it didn’t give clear guidance on how you can narrowly tailor your policies to stay in compliance.

In fact, the majority stated, “Given the wide range of work rules, the varying language they use, and the many different employment contexts in which they arise, we do not expect our new standard to provide complete certainty and predictability in this area of the law.” Expect a number of cases to be litigated on this topic in the near future.

Axley Attorneys will continue to monitor the status of the Board’s interpretation and enforcement of the Stericycle standard and are prepared to assist clients in reviewing and revising employee handbooks and policies.

Chris Toner is a partner with Axley Brynelson, LLP, in Madison, Wisconsin. He can be reached at ctoner@axley.com.

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