Client Alert: NLRB Sets New Standard For Evaluating Lawfulness of Handbook Policies
Date: August 28, 2023
The decision in Stericycle, Inc., 372 NLRB No. 113 (Aug. 2, 2023), overrules both the case-by-case approach discussed in Lutheran Heritage, 343 NLRB No. 646 (2004), as well as the more deferential standard adopted in Boeing Co., 365 NLRB No. 154 (2017), and LA Specialty Produce Co., 368 NLRB No. 93 (2019). Where the Lutheran Heritage case did not, in the opinion of the Board, go far enough in explaining how an employer’s interest factored into an analysis of the lawfulness of employer policies, the latter cases, were too deferential to the employer’s interests, and unnecessarily intruded on employee rights.
At issue in these cases is Section 7 of the National Labor Relations Act (NLRA), which spells out an employee’s “right to self-organization, to form, join or assist labor organizations, to bargain collectively, … and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Although the NLRA is primarily focused on union organization and collective bargaining, the rights guaranteed under Section 7 apply to all employees of covered employers, whether union or non-union.
In Stericycle, the Board focused on several specific policies in the employee handbook which the Board General Counsel contended infringed on this right of employees to engage in collective activities. These policies included a broad confidentiality requirement for all investigations of harassment complaints, a broad prohibition on the use of cell phones, and the taking of photos in work areas, prohibition of conduct which “maliciously harms or intends to harm the business,” and engaging in behavior that is damaging to the company’s reputation, or which “adversely reflects on the company’s reputation.”
In overruling prior precedent, the Board did not analyze the specific policies challenged as unlawful. Instead, it set out a new rule and sent the case back to the Administrative Law Judge with instructions to hear further evidence from the parties addressing the lawfulness of the policies in light of the new standard.
Under new rule imposed by the Board, a work rule will be assumed to be unlawful if the NLRB General Counsel is able to show that the rule has a “reasonable tendency” to chill employees from exercising their organizing rights or otherwise has a coercive meaning. In making this showing, the Board must consider the rule from the perspective of the employee, who is economically dependent on the employer. The employer’s intent and legal interpretations of the questioned rule are irrelevant.
Once this minimal showing is made, the burden then shifts to the employer to prove that the rule “advances a legitimate and substantial business interest,” and that this cannot be accomplished with a “more narrowly tailored rule.”
The Board offers no guidance on the level of evidence necessary to meet this standard. Moreover, by explicitly overruling the Lutheran Heritage Village and LA Specialty Produce cases, they have removed any clear existing interpretive guideposts for determining what factors will substantiate an employer’s legitimate reasons for its challenged policy. Although the line of prior cases may be helpful to establish what the board may consider a legitimate employer interest – safety, customer service, protection of trade secrets, and production processes, etc. – those cases will no longer be conclusive under the new rule.
The NLRA applies to most private sector employers, including manufacturers, retailers, private universities, and health care facilities. As noted, the rights implicated by this recent decision affect all covered employers, and not simply those with a unionized workforce. Affected employers should begin a review of their workplace policies – particularly those relating to cell phone use, internet and social media usage, employee conduct, and confidentiality rules – both from the standpoint of whether the rule is justified by a legitimate and substantial business interest, and the extent to which the policy could be more narrowly tailored to protect that same interest without infringing on employee rights.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.