Highlights:
- NLRB's Stericycle decision introduces a stricter standard for assessing the lawfulness of workplace rules.
- Employers now need to prove their rules will not chill employees' Section 7 rights to avoid being presumptively unlawful.
- Stericycle overturns Boeing standard, calling for narrowly tailored rules that promote business interests while respecting employee rights.
On August 2, 2023, the National Labor Relations Board (NLRB or the "board") issued a significant decision in Stericycle, Inc., 372 NLRB No. 113 (2023) that establishes a new legal standard for evaluating the lawfulness of an employer's work rules, including policies and handbook provisions, that do not expressly restrict employee's protected concerted activity under Section 7 of the National Labor Relations Act (NLRA).
The NLRA generally applies to both union and non-union workplaces and covers employees who are not public-sector employees, agricultural or domestic workers, independent contractors, workers employed by a parent or spouse, employees of air or rail carriers, or supervisors. Section 7 of the NLRA guarantees covered employees "the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection," and the right "to refrain from any or all such activities."
The New Standard
Under the new Stericycle standard, when a work rule is challenged, the NLRB's General Counsel must prove that the rule has a reasonable tendency to keep employees from exercising their Section 7 rights. The board will interpret the rule from the perspective of an employee who is economically dependent on the employer and contemplates engaging in protected concerted activity. If an employee could reasonably interpret the rule to have a coercive meaning, the General Counsel will carry her burden and the rule is presumptively unlawful, even if a contrary, noncoercive interpretation of the rule is also reasonable.
To rebut the presumption, the employer may prove that the rule advances a legitimate and substantial business interest and that it is unable to advance that interest with a more narrowly tailored rule. If the employer is successful then the work rule will be found lawful to maintain.
The Stericycle decision overrules The Boeing Co., 365 NLRB No. 154 (2017), which held that when deciding the lawfulness of maintaining a facially neutral work rule, the board would balance two factors:
- The nature and extent of the potential impact on NLRA rights; and
- Legitimate justifications associated with the rule.
In the Stericycle Board's view, the overruled Boeing standard condones overbroad work rules by not requiring the employer to narrowly tailor its rules to promote only legitimate and substantial business interests while avoiding burdening employee rights. The Stericycle Board also rejected Boeing's categorical approach to work rules, under which certain rules were "always lawful," stating that the primary problem with this approach is that "it was regularly applied to designate all rules of a generalized type as always lawful to maintain, no matter their specific wording, the specific industry or workplace in which the employer maintained the rule, the specific employer interests that the rule was supposed to advance, or any number of context-specific factors that may have arisen in a particular case."
The adopted new standard applies only to facial challenges to maintain work rules that do not expressly apply to employees' protected concerted activity. According to the board, it does not change the existing law that an employer's maintenance of a work rule will be deemed unlawful when it explicitly restricts Section 7 activity or was promulgated in response to union or other protected concerted activity. Additionally, the board said it was not addressing the unlawful application of work rules that are lawful to maintain.
The new standard will apply retroactively to pending cases. Under the specific facts in the Stericycle case, the General Counsel had alleged that the employer unlawfully maintained overbroad work rules governing personal conduct, conflicts of interest, and confidentiality of harassment complaints. The NLRB remanded the case for further proceedings to allow the parties an opportunity to present arguments under the new standard.
Significantly, just a week after Stericycle was issued, an NLRB administrative law judge, applying the new Stericycle standard in Starbucks Corp., Case 04-CA-294636 (2023), held that a civility rule in Starbucks' "How We Communicate" policy violated the NLRA. The civility rule stated that employees are expected to communicate with other employees and customers "in a professional and respectful manner at all times" and that "[t]he use of vulgar or profane language is not acceptable."
Implications for Employee Handbooks and Beyond
In defending its case-specific approach to work rules, the Stericycle Board rejected the prediction that the narrow-tailoring requirement would prove impossible to meet. According to the board, employers are "more than equipped to narrowly tailor their work rules to eliminate overbreadth." The board also declined to explain how employers should tailor their rules, stating that in the absence of a specific rule, promulgated in a specific workplace, it is premature for the board to assume how a work rule could potentially be narrowly tailored.
As for whether any sort of "savings" or "safe harbor" language might effectively work to disclaim an intention to infringe on Section 7 rights, the board noted that no "safe harbor" issue was presented in the case, but that in considering whether a rule reasonably tends to keep an employee from exercising statutory rights or is sufficiently narrowly tailored, it would "evaluate any explanations or illustrations contained in the rule regarding how the rule does not apply to Sec. 7 activity."
Employers, however, should not generally expect that a disclaimer alone would be sufficient to meet the new standard.
If the NLRB finds a workplace rule to be unlawful, it may, among other things, require an employer to rescind or redact the policy and post and distribute notices to workers that the policy was illegal. The rule could also have other legal consequences if, for example, it was the basis of a decision to terminate an employee and is found to be unlawful.
Moving Forward – What Should Employers Do?
Ultimately, Stericycle constitutes a significant departure from the more clear-cut, categorical Boeing approach and is likely to lead to uncertainty concerning the lawfulness of and a significant uptick in challenges to workplace rules in upcoming years. The lawfulness of particular policies will be a fact-intensive inquiry based on specific wording, the specific industry and workplace in which the employer maintains the rule, the specific employer interests that the rule is supposed to advance, and other context-specific factors that may arise. The analysis will also be shaped by subsequent NLRB decisions and any guidance that is issued by the NLRB's General Counsel.
In light of Stericycle, employers should take a close look at their employee handbook and any other employment policies, with particular focus on policies such as use of technology (including photography and recording), social media, speaking to the media, solicitation, disciplinary rules, dress code, internal complaints/open door, non-disparagement, civility, insubordination, conflicts of interest, and confidentiality and investigations. Employers should aim to review their policies from the lens of an employee and consider what business interest each work rule serves and whether that interest can be advanced with a more narrowly tailored rule.
Recommended Resources
https://www.nlrb.gov/case/04-CA-294636
Originally published by HR.com.
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