Time For Handbook Review

NLRB Adopts New Standard

September 3, 2023

On August 2, 2023, the National Labor Relations Board (the “Board”) adopted a new standard for evaluating the legality of workplace rules under the National Labor Relations Act (the “NLRA”).  Employers in both unionized and non-unionized settings should review their employee handbooks and policies to ensure compliance with the new standard established in Stericycle, Inc., 372 NLRB No. 113 (2023).

As the Board noted, it is well established that the dominant purpose of the NLRA is to protect the rights of employees 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 the rights of the employer 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 Boeing Co., 365  NLRB No. 154 (2017).  In that case, the majority held that when the Board decided the lawfulness of an employer 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 it against whether the rule could also have a chilling effect on the 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’ rights under the NLRA.

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

Under the new standard, the General Counsel must show that a rule has a reasonable tendency to chill employees from exercising their rights.  The Board clarified that 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 the employer is unable to advance that interest with a more narrowly tailored rule.  It is important to note that the Board will apply its new Stericycle standard retroactively.

Next Steps for Employers

The Stericycle decision is the most recent employee friendly decision issued by the National Labor Relations Board.  Employers would be well served in reviewing existing handbooks and policies to attempt to comply with the new Stericycle standard, as the Board noted that overly broad policies will be found unlawful.  However, it did not give clear guidance on how employers can narrowly tailor their 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 review and revise employee handbooks and policies.