On August 2, 2023, the National Labor Relations Board issued a pivotal decision affecting workplace conduct rules that impacts essentially all employers. In Stericycle, the NLRB adopts a new standard for evaluating the legality of such rules. According to the Board, rules that have a reasonable tendency to chill employees from exercising their rights to engage in concerted activities are presumptively unlawful.
The Board’s ruling calls into question all existing work rules, and employers should immediately review their employee handbooks and policies to determine whether they comply with the new standard.
In the 2017 Boeing decision (later revised as LA Specialty Produce Co. in 2019), the Board adopted a classification system to determine if work rules violate employees’ rights under Section 7 of the National Labor Relations Act, which include the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively. . . , and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Under the Boeing standard, work rules were classified as always lawful, sometimes lawful, or always unlawful.
In this week’s Stericycle decision, the Board considered whether work rules governing personal conduct, conflicts of interest, and confidentiality of harassment complaints violate employees’ rights after an administrative law judge found such rules to be unlawful under the Boeing standard.
The Board found that the standard allowed employers to adopt overbroad work rules that chill employees’ rights. Overruling that standard, the Board held that work rules should be considered on a case-by-case basis.
Under this new standard, rules that have a reasonable tendency to chill employees from exercising their Section 7 rights are presumptively unlawful. The NLRB will interpret the rule from the perspective of the “reasonable employee who is economically dependent on her employer and thus inclined to interpret an ambiguous rule to prohibit protected activity she would otherwise engage in.” Employers may rebut the presumption only 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. If the employer meets this burden, the rule will be found lawful to maintain.
The new standard applies retroactively, so existing work rules will be evaluated under the Stericycle standard.
Rather than determining whether the work rules at issue are lawful, the Board sent the case back to the administrative law judge to allow the parties to present argument and evidence under the new standard.
WHAT EMPLOYERS SHOULD DO NOW
Although the Board did not explain how employers should revise their rules to comply with the new standard, we anticipate the following types of rules could be found unlawful:
- Personal conduct rules, such as those requiring employees to “behave in a professional manner” or refrain from making false statements about the employer;
- “No camera” and “no recording” policies;
- Anti-loitering rules that deny off-duty employees access to the workplace; and,
- Policies that mandate employees keep their workplace complaints confidential and/or require them to only discuss such complaints with HR.
Employers should work with outside legal counsel to review their existing employee handbooks and policies to ensure compliance with the new standard.
Phillips Murrah’s Labor and Employment Law team will continue to closely monitor this and other developments that impact our clients.
About the authors:
Michele C. Spillman is a Shareholder with a background in both commercial litigation and labor & employment law. She represents employers in a wide variety of industries and provides advice and counsel on federal and state employment laws regarding discrimination, harassment, retaliation, medical leave requests and accommodations, and wage and hour issues. She also assists employers with human resources matters, including employment policies, handbooks, severance agreements, non-competition matters, and internal investigations into alleged violations of various employment laws.
Janet A. Hendrick is Shareholder and an experienced employment lawyer who tackles each of her client’s problems with a tailored, results-oriented approach. Whether training managers on employment law compliance to minimize an employer’s legal risk or representing employers in high stakes employment or trade secret litigation, she brings years of experience and in-depth legal knowledge to deliver results.