NLRB Adopts New Standard for Employer Work Rules

Employment Law

The National Labor Relations Board (NLRB) has adopted a new standard for evaluating challenges to employer work rules as facially unlawful under Section 8(a)(1) of the National Labor Relations Act (NLRA), overruling a decision from 2017.

Employers have witnessed the standard change several times over the last few years.

In 2017, the NLRB considered the Boeing Company’s policy restricting the use of camera-enabled devices (such as cellphones) on its property. An administrative law judge (ALJ) applied the test set forth in 2004’s Lutheran Heritage Village-Livonia and determined that employees would “reasonably construe” the rule to prohibit Section 7 activity, striking it down.

Boeing appealed and the NLRB reversed, tossing out the Lutheran Heritage standard and adopting a new rule.

“The judge’s decision in this case exposes fundamental problems with the Board’s application of Lutheran Heritage when evaluating the maintenance of work rules, policies and employee handbook provisions,” the NLRB majority wrote in Boeing Co. “We have decided to overrule the Lutheran Heritage ‘reasonably construe’ standard. The Board will no longer find unlawful the mere maintenance of facially neutral employment policies, work rules and handbook provisions based on a single inquiry, which made legality turn on whether an employee ‘would reasonably construe’ a rule to prohibit some type of potential Section 7 activity that might (or might not) occur in the future.”

A few years later, the issue presented itself to the Board again after an ALJ found multiple rules by Stericycle to violate the NLRA, including a “personal conduct” rule, as well as rules about conflicts of interest and confidentiality of harassment complaints.

When Stericycle appealed, the NLRB invited the parties and interested amici to weigh in on whether it should continue to adhere to the standard in Boeing Co. or if it should modify existing law.

The Board majority then adopted a new legal standard, reversing Boeing Co. and revising and building upon Lutheran Heritage.

“To begin, the current standard fails to account for the economic dependency of employees on their employers,” the NLRB wrote. “Because employees are typically (and understandably) anxious to avoid discharge or discipline, they are reasonably inclined both to construe an ambiguous work rule to prohibit statutorily protected activities and to avoid the risk of violating by engaging in such activity.”

The Boeing standard gave too little weight to the burden a work rule could impose on employees’ Section 7 rights and the purported balancing test gave too much weight to employer interests, the Board said.

“The standard we adopt today remedies these fundamental defects,” the NLRB wrote. “We adopt a modified version of the basic framework set forth in Lutheran Heritage, which recognized that overbroad workplace rules and policies may chill employees in the exercise of their Section 7 rights and properly focused the Board’s inquiry on NLRA-protected rights. …

“However, although Lutheran Heritage implicitly allowed the Board to evaluate employer interests when considering whether a particular rule was unlawfully broad, the standard itself did not clearly address how employer interests factored into the Board’s analysis. The modified standard we adopt today makes explicit that an employer can rebut the presumption that a rule is unlawful by proving that it advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule.”

If the employer proves its defense, then the work rule will be found lawful to maintain.

The Board said it will interpret the rule 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.

To read the decision and order in Stericycle, Inc., click here.

Why it matters

Reversing the legal standard to decide whether an employer’s work rule that does not expressly restrict employees’ protected concerted activity under Section 7 is facially unlawful, the majority of the NLRB adopted a new, revised version of the standard found in Lutheran Heritage. While the Board will now interpret the rule from the perspective of the employee, considering whether the challenged rule has a reasonable tendency to chill employees from exercising their Section 7 rights, the decision made explicit that an employer can rebut the presumption by proving 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. The new standard will also apply retroactively.



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved