NLRB adopts new legal standard for evaluating employer work rules

Over the past 20 years, the United States workforce has experienced shifting standards related to the evaluation of work rules. Often associated with changes in administration and the composition of the National Labor Relations Board (NLRB), these work rule standards shifted yet again on August 2, 2023, when the NLRB issued its decision in Stericycle, Inc., 372 NLRB No. 113 (2023). In doing so, the NLRB implemented a modified version of a previous standard.

The ever-changing history of these work rule standards is key to understanding the significance of the Stericycle decision.

Background on the history of NLRB work rule standards

• In 2004, in Martin Luther Memorial Home, Inc. d/b/a/ Lutheran Heritage Village Livonia, 343 NLRB No. 75 (2004), the NLRB implemented a three-prong test for evaluating work rules whereby if a work rule did not explicitly restrict activity protected by Section 7 of the National Labor Relations Act (NLRA), in order to establish a violation of the NLRA, a party would need to establish one of the following:
  • employees would reasonably construe the language to prohibit Section 7 activity;
  • the rule was promulgated in response to union activity; or
  • the rule has been applied to restrict the exercise of Section 7 rights.
    
    This standard was largely regarded as “employee friendly” due to the likelihood of ambiguous work rules being deemed unlawful.
• In 2017, in The Boeing Company, 365 NLRB No. 154 (2017), the NLRB overruled the 2004 Lutheran Heritage standard and established a new standard whereby, when evaluating a facially neutral policy, rule, or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the NLRB would balance the nature and extent of the potential impact on NLRA rights with the legitimate justifications associated with the rule. This standard was largely considered “employer friendly” as it balanced an employer’s justification for a particular work rule with the adverse impact on the rights protected by the NLRA.
• In 2019, in yet another “employer friendly” decision, the NLRB clarified and affirmed the Boeing standard in LA Specialty Produce Co., 368 NLRB No. 93 (2019). In LA Specialty, the NLRB clarified that it is the NLRB general counsel’s responsibility to establish that a reasonable employee would interpret a facially neutral rule as potentially interfering with their ability to exercise their Section 7 rights. As such, if a reasonably construed rule would not restrict employees’ protected activities, the rule would be considered valid. If a reasonably construed rule would be interpreted by a reasonable employee as potentially interfering with the exercise of their Section 7 rights, the NLRB would apply the Boeing

Impact of NLRB's Stericycle decision on your business

The Stericycle decision implements a modified version of the NLRB’s 2004 Lutheran Heritage standard and, yet again, shifts the NLRB’s focus to a standard that is more “employee friendly.” Under the Stericycle standard, to deem a work rule illegal, the NLRB’s General Counsel must prove that the challenged rule has a reasonable tendency to chill employees’ exercise of their rights under the NLRA. However, the Stericycle standard gives the employer an opportunity to rebut the presumptive illegality of a work rule by establishing that the rule advances a legitimate and substantial business interest, and that the employer is unable to use a more narrowly tailored rule to advance that interest. If the employer is able to do so, the rule will be found to be lawful.

In light of the NLRB’s shift to a more employee-friendly standard, employers should ensure that their work rules, policies, and handbooks are narrowly tailored to advance legitimate and substantial business interests if there is the possibility of a chilling effect on employee Section 7 rights.