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The current National Labor Relations Board has been described as one of the most progressive Boards in recent history. Over the last three years, the Board has systematically overturned decisions from the decidedly more employer-friendly Trump appointed Board. This pattern continued on August 2, 2023, when the Board majority in a case called Stericycle overruled the previous standard for evaluating whether facially neutral employer work rules violate the National Labor Relations Act (the “Act”). The old rules were set forth by the Trump-era Board in a case called Boeing. In Stericycle, the Board ditched the Boeing standard in favor of a much more employee-friendly framework for evaluating whether commonplace employee handbook policies violate employee rights under the Act. The decision and its impact are described in detail below.
The Board’s Decisions Apply to Both Union and Non-Union Businesses
Most employers have little experience with the NLRB. That’s because the Board’s primary function is the enforcement of the Depression-era federal law governing union-management relations. However, the Act also applies to an array of so-called “protected concerted activity” by non-union employees when working together for the perceived betterment of their workplace.
The Board closely scrutinizes workplace rules and employee handbook policies of non-union businesses to ensure they do not contain any provisions that could be interpreted as infringing upon employee rights to engage in protected concerted activity under the Act. If the Board finds that a union or non-union business has engaged in an Unfair Labor Practice by maintaining one or more unlawful employment policies, then the Board will authorize issuance of a Complaint seeking the alteration or elimination of the rule(s). Thus, it is important for non-union businesses to be aware of the Board’s rules and decisions to ensure compliance with the Act and avoid costly legal challenges to the employer’s policies.
Previous Board Law
Prior to the Board’s recent decision on August 2nd, the Board used the Boeing standard to determine whether facially neutral workplace rules and handbook policies violated the Act. Under that standard, the Board balanced an employer’s interest in maintaining a policy against the impact on employee rights under the NLRA. In doing so, the Board divided workplace rules into three categories:
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Category 1 Rules. Consist of standard, commonplace rules which most employers have a significant interest in maintaining and do not particularly infringe on employees’ rights. These rules are considered categorically lawful to maintain but may be applied in an unlawful manner. Examples of Category 1 rules are policies concerning the disclosure of confidential or proprietary information and workplace civility rules.
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Category 2 Rules. These generally consist of rules that are specific to the particular workplace and are analyzed on a case-by-case basis in light of the employer’s justification for the rule. Examples of Category 2 rules are confidentiality policies and restrictions on wearing or displaying union insignia.
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Category 3 Rules. These rules are generally considered unlawful infringements on employees’ rights under the Act. Examples of Category 3 rules include making an entire employee handbook confidential, a nondisclosure policy regarding wages, and broad prohibitions on employee communications with the media.
The New Standard Under Stericycle
In Stericycle, the Board replaced the Boeing standard with a modified version of the previous standard from the Obama Board in the Lutheran Heritage case. The Board stated that Boeing was flawed because it failed to take into account the economic dependency of employees on their employers. Given such economic dependency, the Board concluded that employees are inclined to construe work rules broadly to avoid discipline or potential termination. The Board also criticized the Boeing standard stating that the balancing test gives too much weight to employer interests and fails to require employers to narrowly tailor work rules that impact employee rights.
Using these principles, the Board adopted the following burden shifting framework in its place: (1) the General Counsel must first prove that a challenged work rule has a reasonable tendency to chill employees from exercising their rights under the Act; and (2) if so, then the employer may then rebut the presumption of unlawfulness by proving that the rule advances a legitimate and substantial business interest and is narrowly tailored to that interest. Thus, a neutral workplace rule is presumed unlawful if it could potentially cause employees to refrain from exercising their rights under the Act. In another key departure from any standard previously adopted by the Board, the Board will now interpret the workplace rule in question from the perspective of an employee who is “economically dependent on the employer” and contemplates engaging in protected concerted activity.
Takeaways for Employers
Employers should review their employee handbooks and other workplace rules and policies through the lens of the new standard adopted by the Board. While it is still unknown precisely how the Board will apply the decision to specific workplace rules and policies, employers should err on the side of caution as this is a substantially more stringent standard than previously applied. Remember that the Act applies to most workplaces, regardless of whether they are unionized.
We will continue to monitor developments, and should you have any questions about the Rule, please call your firm contact at 818-508-3700 or visit us online at www.brgslaw.com.
Sincerely,
Richard S Rosenberg
Matthew T. Wakefield
Charles W. Foster
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