03 August 2023

NLRB Rolls Back Standard for Evaluating Employer Work Rules

Yesterday afternoon, the National Labor Relations Board issued its decision in Stericycle, Inc., nixing a Trump-era standard for workplace rules and returning to a modified version of its 2004 standard.  The decision reverses a reasonable standard that incorporated full consideration of important business interests supporting employer workplace rules and policies. The decision creates risk and uncertainty for employers that many reasonable and common workplace rules will be viewed as unlawful under federal labor law.

In 2004, the Board decided Lutheran Heritage Village-Livonia, which held that employers who implemented a neutral workplace rule could still violate the National Labor Relations Act if the NLRB determined that some of its employees might reasonably interpret the rule to impact Section 7 rights and activity under the Act (e.g., the right to support unions, to bargain collectively through union representatives, and to engage in concerted activities for mutual aid or protection).  Under Lutheran Heritage and the cases that followed, the NLRB targeted and found many employer rules unlawful, such as basic civility policies, protection of confidentiality in investigation, and restrictions on workplace video/audio recordings.

Slightly over a decade later, the NLRB upended Lutheran Heritage.  In 2017 the Board decided Boeing Co. and adopted a new standard to assess whether neutral workplace policies might be unlawfully restrictive of employee rights under the NLRA. That decision recognized that many work rules and policies serve long-standing important operational and business needs and interests and that those interests should be weighed against any potential impact on employee rights.  The Boeing Co. decision established three categories for work rules – rules that were always lawful because they were supported by sound business rationale, rules that were always unlawful because they directly infringed upon employee rights, and rules that were sometimes lawful but would require a balancing of the business interests against possible impact on protected activity.  In Boeing Co., for example, the Board upheld a rule banning camera recording in the workplace as generally lawful, for Boeing and for other employers.

Stericycle returns to the Lutheran Heritage standard, with slight modifications.  The NLRB will now evaluate workplace rules and policies in two steps:

  • The NLRB and its General Counsel will first examine whether a workplace rule may have a “reasonable tendency” to interfere with, restrain, or coerce employees who may engage in Section 7 protected activity. That examination will be principally through the lens of employees who economically depend on the employer.  If this low “reasonable tendency” hurdle is met, the rule or policy will be presumptively unlawful.
  • Next, if the rule is presumptively unlawful, the employer must show that the rule furthers a legitimate and substantial business interest and that the rule is as narrow as it can be while still furthering that interest. If the employer cannot show that the rule furthers an interest and is narrowly drawn, the NLRB will find a violation of the NLRA.

This decision means that all employers, whether unionized or not, must again carefully consider their workplace rules and assess whether each rule may implicate NLRA rights and create risk of an unfair labor practice.  We recommend that you discuss the potential impact of this decision on your organization’s rules and policies, the potential risks associated with reasonable work rules that may now be viewed as overly broad and violative of federal labor law, and whether you should modify or change those rules.