New Ruling from the National Labor Relations Board May Require Significant Handbook Revisions

On August 2, the National Labor Relations Board issued a decision, Stericycle Inc. and Teamsters Local 628, that creates a new legal standard for how the NLRB will evaluate workplace rules and policies to determine if such rules interfere with employees’ protected rights to engage in concerted workplace activity under Section 7 of the National Labor Relations Act. Specifically, the decision overturned the previous standard set under Boeing Co.,365 NLRB No. 154 (2017), and creates a higher hurdle for employers to justify workplace rules.

What changed?

The Boeing decision, which had reversed the previous standard announced in Lutheran Heritage Village-Livonia, 343, NLRB 646 (2004), held that certain types of work rules were categorically lawful for employers to maintain, and others could be evaluated on a case-to-case basis to determine if they interfered with NLRA rights and, if so, any adverse impact was outweighed by legitimate business justifications.

The new Stericycle standard, which “builds on and revises” the previous Lutheran Heritage standard, requires that workplace rules be narrowly tailored to “advance legitimate and substantial business interests,” and minimize the risks of interfering with workers’ rights to act collectively.

A new two-part test.

Workplace rules and policies now can be ruled unlawful pursuant to a two-part test. First, the NLRB will analyze a challenged rule or policy to determine if an employee could reasonably interpret the rule or policy as restricting their Section 7 rights, even where the rule could also reasonably be interpreted differently and/or the employer did not intend for the rule to restrict employee rights. To do this, the NLRB will assess the rule or policy “from the perspective of an employee who is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity.” Any presumption that a rule/policy has a “tendency” to suppress protected activity may only be rebutted where the employer can prove that such rule or policy advances legitimate and substantial business interests that cannot be achieved by a more narrow rule. This standard applies retroactively and to both union and non-union workplaces.

The Stericycle decision, which was decided on a 3-1 basis, also contains a strongly worded dissent noting that the new standard gives too much emphasis on an employee’s potential interpretation, making it very difficult for employers to be able to enact workplace standards that are “general enough to serve intended lawful purpose” without also being “susceptible to an interpretation that infringes Section 7 rights.”

While little guidance exists on how the decision will actually be applied to certain types of rules or policies, employers should review and if necessary revise handbook rules and policies, particularly before relying on any such rule or policy to implement employee discipline or a termination decision. Policies that are most likely to be impacted include those relating to confidentiality rules, social media policies, and disciplinary rules and policies.

We will continue to provide updates as they develop.

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