On August 2, 2023, the National Labor Relations Board (“NLRB”), with a majority of members nominated by President Biden, issued a long-awaited decision in Stericycle, Inc. and Teamsters Local 628 (372 NLRB No. 113 (2023)) that completely upends the legal standard for evaluating whether employer work rules violate Section 8(a)(1) of the National Labor Relations Act (“NLRA”). Under this new standard (which in itself is a revival and modification of the NLRB’s 2004 opinion in Lutheran Heritage), any employer’s rule, policy, or handbook provision that could potentially limit an employee from exercising their Section 7 rights is “presumptively unlawful.”

Under this new standard, employer policies and rules will be viewed from the perspective of a lay employee who is “economically dependent” on the employer (rather than using a “reasonable” employee standard) who contemplates engaging in protected concerted activity and is fearful of financial consequences. According to the NLRB, concerted activities include talking with one or more co-workers about wages, benefits, or other working conditions, petitioning for better hours, participating in a concerted refusal to work in unsafe conditions, joining with co-workers to talk directly to an employer, a government agency or the media about problems in the workplace. Should the General Counsel, Jennifer Abruzzo, prove that an employer rule could be interpreted to be coercive, thus chilling protected activity, she will have met her burden to declare the rule “presumptively unlawful.” It then falls to the employer to rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.

In short, the legal risks to employers resulting from overbroad work rules and/or handbook language have increased.

Employer Policy Implications

The Stericycle opinion rejects and retroactively negates the NLRB’s decision in The Boeing Co., 365 NLRB 154 (2017). Under Boeing, rules, policies and handbook provisions were treated as either categorically lawful (e.g., investigative-confidentiality rules, nondisparagement rules, and rules prohibiting outside employment) or subject to a balancing test that weighed the tendency to restrict Section 7 rights against the business needs justifying them. The new Board argues that because Boeing is only a few years old and not well established, any pending cases will be reviewed using the new standard. Consequently, handbooks or policies that were adopted based on prior guidance from the NLRB may now be challenged.

Under the new standard, the Board will consider a rule presumptively unlawful if it could, rather than would, be interpreted to limit employee rights. Secondly, it practically assumes coercion based on the “economic dependency” of the worker. With these caveats, it is difficult to imagine a scenario where the General Counsel would be unable to interpret a rule in such a way as to show that it could potentially chill employees from exercising their Section 7 rights. Case in point, in Stericycle the underlying matter determined that a policy requiring employees to act “civilly and refrain from damaging the employer’s reputation” violated the employee’s rights.

Even though the decision will likely be appealed, the appellate process could take years and, in the meantime, the NLRB will be enforcing this new standard. Examples of policies that employers should review (and potentially rewrite) in the interim include rules:

  • Restricting employees’ use of social media;
  • Restricting criticism, negative comments, and disparagement of the company’s products, services, or management;
  • Promoting workplace civility;
  • Prohibiting insubordination;
  • Requiring confidentiality of investigations and complaints;
  • Outlining specific rules to follow in order to make safety complaints;
  • Prohibiting the use of cameras or recording devices in the workplace;
  • Limiting the recording of meetings or the use of smartphones;
  • Restricting meetings with co-workers or the circulation of worker petitions;
  • Limiting comments made to the media or government agencies

It is unclear whether a “safe harbor” provision – one stating that no rule or policy adopted by the employer should be interpreted as interfering with employees’ Section 7 rights – will be sufficient to circumvent a “presumptively unlawful” finding. The NLRB stated in a lengthy footnote in the Stericylce decision that it would “evaluate any explanation or illustrations contained in the rule regarding how the rule does not apply to activity protected by Sec[tion] 7.”

Employers found to maintain unlawful rules could be ordered to remove the rules, and the employer forced to post and distribute notices to employees acknowledging the violation. Presumptively unlawful policies could also potentially be used as evidence of anti-union animus during union organizing campaigns or by employees subjected to adverse employment actions. Under the NLRB, the agency has traditionally used its authority to seek make-whole remedies, such as reinstatement and back pay, for improperly discharged workers but under another recent ruling (Thryv, Inc., December 13, 2022) the NLRB significantly expanded the definition of “make whole” to include all “direct or foreseeable pecuniary harm” such as out-of-pocket medical expenses, credit card debt, late mortgage or rent payments, any other costs the employee faced due to an unfair labor practice.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.

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