On August 2, 2023, the National Labor Relations Board ("NLRB") issued a 3-2 decision, Stericycle, Inc., that adopted a new legal standard for evaluating employers' workplace policies and rules. Under the new standard, an employer's workplace policy may violate employees' rights under the National Labor Relations Act ("NLRA") if its policies have a "reasonable tendency" to chill its employees from exercising their rights under Section 7. The decision will have broad-reaching effects for employers and may require a comprehensive review of policies and employee handbooks.
Previously, the NLRB would evaluate an employer's policy by balancing a two-factor framework set forth in Boeing. Under that two-factor framework, rules were evaluated by (i) the nature and extent of the potential impact on an employee's rights under the NLRA; and (ii) legitimate justifications associated with the employer's policy. Boeing Co., 365 NLRB No. 154 (2017); LA Specialty. Additionally, under Boeing, an overbroad rule was not sufficient to result in a violation of the NLRA. The Boeing Board also created a categorical classification system to evaluate rules. Category 1 rules were always lawful to maintain, Category 2 rules would warrant scrutiny for each case, and Category 3 rules were always unlawful. The Boeing standard typically resulted in a favorable outcome for employers, allowing otherwise facially neutral policies to stand.
The Stericycle Board found the Boeing standard problematic because it allowed employers to draft and implement overbroad policies that chill employees' exercise of their Section 7 rights. In Stericycle, Inc., the Board threw out the old standard, now holding that an employer's policies could violate the NLRA if the policies have a "reasonable tendency" to interfere with an employee's exercise of their rights under Section 7, which includes an employee's right of self-organization, to form, join, or assist labor organizations, and to engage in other "concerted activities for the purpose of collective bargaining or other mutual aid or protection." The Board further clarified that the Boeing standard failed to take into account the economic dependency of their employees which could lead to a tendency to follow an employer's rules that prohibit certain activities in order to avoid discharge or discipline by their employer. The old standard, as the Board puts it, gave too much weight to the employer's interest, while the new standard gives more weight to an employee's interest.
The new standard harkens back to the Bush-era decision, Lutheran Heritage Village-Livonia (2004). Unlike Lutheran Heritage, the new standard clearly articulates how an employer's interests factor into the analysis. The ruling creates a new burden-shifting framework: if the General Counsel demonstrates that an employer's policies have a "reasonable tendency" to chill employees' exercise of their rights under the NLRA, then the employer has an opportunity to rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that a more narrowly tailored rule will not suffice.
So how does this apply in practice? The Board used its new standard to evaluate several standards in Stericycle's employee handbook. While the Board found that Stericycle's personal electronic use policy did not violate the NLRA, it took issue with Stericycle's policy concerning "personal conduct." Stericycle's policy prohibited employee conduct "that maliciously harms or intends to harm the business reputation of the company." Because the policy provision did not make an exception for statements related to Section 7 activity, the Board found that it was in violation of the NLRA. Similarly, the Board determined that Stericycle's harassment policy prohibiting employees from disclosing "complaints and the terms of their resolution," was overbroad and thus also violated the NLRA.
While employers have an opportunity to defend their policies if challenged, employers should pay close attention to how Stericycle's policies were scrutinized by the Board. Additionally, employers should evaluate what this decision means for their businesses and ensure that their policies are both narrowly tailored and connected to a legitimate business interest.
- Consider revising policies to ensure that they comply with the new standard; specifically, ensure that the policies are narrowly tailored and connected to a legitimate business interest.
- Review policies to ensure that the language is clear and free from ambiguity.
The Board's new standard applies retroactively to pending cases.
Originally published August 8, 2023.
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