Changing the rules: The new standard for employer policies under the National Labor Relations Act

The National Labor Relations Board (NLRB) placed employers on notice with its decision in Stericycle, Inc. & Teamsters Loc. 628, 372 NLRB No. 113 (Aug. 2, 2023). The board held that general prohibitions of employee activity in workplace rules that have a tendency to chill concerted activity without a narrowly defined purpose would violate the National Labor Relations Act (NLRA).

The current board rejected the standard under The Boeing Co., 365 NLRB No. 154 (Dec. 14, 2017)finding that the standard allowed employers to implement broad rules that could restrict employees from exercising their rights under Section 7 of the NLRA. In Boeing, the board established three categories to evaluate facially neutral work place policies, rules or handbooks. When evaluating the employer’s policies, the board would consider (1) the nature and extent of the potential impact on NLRA rights and (2) the legitimate justification associated with the rule.

After the board’s evaluation, it would categorize the rules as follows: Category 1: rules that were lawful to maintain; Category 2: rules that warrant individualized scrutiny in each case; and Category 3: rules that were unlawful. The board’s determination of a Category 1 rule: employees shall work harmoniously and conduct themselves in a positive manner. It was determined that rules similar to this were common sense and it was reasonably expected that every employer would want to maintain workplace harmony. Category 1 rules, when reasonably interpreted, would not have a tendency to interfere with rights under the NLRA. Category 2 and 3 rules were those that could have an adverse impact on rights under the NLRA.

The board in Stericycle found policies should not automatically be grouped into categories. The board determined that every employer policy should be evaluated to ensure that it was narrowly tailored to further business interests and not unnecessarily burden employee rights. Employer policies should be evaluated to determine if a reasonable employee would take pause when considering the employer policy and engaging in activity protected under Section 7 of the NLRA.

The new standard under Stericycle requires NLRB general counsel to prove that a challenged employer policy has a reasonable tendency to chill employees from exercising their right under Section 7 of the NLRA. If the employee could reasonably interpret the rule to have coercive meaning, counsel will carry its burden and the rule is presumptively unlawful. The employer can rebut the presumption by proving a legitimate business interest for the rule. If the employer proves its defense, the rule will be found lawful.

The Stericycle standard is immediately enforceable and retroactive. The board determined the standard would be applied retroactively where it would not cause manifest injustice. Manifest injuries will be determined by considering the parties reliance on pre-existing law, the effect of retroactivity to accomplish the purpose of the NLRA and any other injustice arising from retroactive application.

With this new standard, employers should re-evaluate their existing employee policies and procedures, revising where necessary, even if subject to a recent determination under the NLRA.

For further information on this decision or any other employment matters, please feel free to contact the employment and labor attorneys at Chuhak & Tecson.

Client alert authored by Markeya A. Fowler  (312 849 41263), mfowler@chuhak.com, Associate.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.