Amidst its busy summer, the National Labor Relations Board (the “Board”) decreed a new legal framework in Stericycle, Inc., 372 NLRB No. 113 (Aug. 2, 2023) for evaluating whether an employer’s workplace rules violate Section 7 of the National Labor Relations Act (the “Act”). In doing so, the Board simultaneously rejected its then-current legal standard, as set forth in Boeing, 365 NLRB No. 154 (Dec. 14, 2017) and Boeing’s progeny, LA Specialty Produce, 368 NLRB No. 93 (Oct. 10, 2019).
By way of background, Section 7 guarantees employees the right to organize, form, join, or assist unions, bargain collectively, engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, as well as to refrain from such activities. Section 8(a)(1) of the Act prohibits employers from interfering with, restraining, or coercing employees’ exercise of those rights. As explained in Stericycle, the Board is tasked with ensuring that employer work rules do not, on their face, inhibit employees from engaging in the aforementioned protected activities, while balancing employer’s legitimate and substantial business interests in maintaining such rules.
Pursuant to the new Stericycle standard, the Board explained that it will first assess whether the Board’s General Counsel has established that a challenged work rule has a reasonable tendency to chill employees from exercising their Section 7 rights. If the General Counsel makes this showing, then the rule is presumptively unlawful, even if the rule could also reasonably be interpreted in a manner that would not violate the Act. Although unlikely, if the General Counsel cannot make this showing, the rule will be deemed lawful. Notably, at this first step, the Board will now interpret the rule from the standpoint of an employee who, due to their economic dependence on their employer, is inclined to perceive the rule as addressing protected activity. This Stericycle “reasonable employee” is diametrically opposed to the Board’s former “reasonable employee,” who, although aware of their legal rights, interpreted work rules in relation “to the everydayness of their job,” and not “through the prism of the [Act].”
At the second step, the employer can rebut the presumption by showing that the rule serves the employer’s legitimate and substantial business interests and is narrowly tailored. Only when the employer makes this showing, will the Board consider the rule to be lawful.
Stericycle also did away with the approach outlined in Boeing, which characterized rules as either “Category 1: always lawful to maintain,” “Category 2: sometimes lawful to maintain,” or “Category 3: never lawful to maintain,” instead reimplementing a case-by-case assessment. Stericycle’s import is that employers can no longer rely on the Board’s prior decisions, which held that certain rules belonged in certain categories. For example, after Boeing many employers relied on the Board’s determination that a “no-camera” workplace rule was lawful to maintain and included one in their handbooks; now, however, the Board will examine the language used by each employer in its “no camera” rule, as well as the individual employer’s interests in maintaining that particular rule.
Given the relative recency of the Boeing decision, as well as the Board’s determination that its new approach better promotes the Act, the Stericycle Board held that its new framework would retroactively apply to all pending cases. This means that regardless of whether an employer developed or implemented rules and/or handbooks during the Boeing era, the Board will analyze the legality of such rules according to Stericycle.
What Stericycle Means for Employers
Interestingly, the Stericycle Board did not address what mitigating effects, if any, an employer’s use of disclaimer language will have on the lawfulness of workplace rules. Until the Board issues additional guidance suggesting otherwise, employers should include disclaimer language making clear that their rules are not intended to infringe upon employees’ Section 7 rights.
As employers evaluate their workplace policies and handbooks in time for the new year, they should also think critically about the necessity of each rule. If an employer determines that a rule is, in fact, important to their business, they should aim to more narrowly tailor it to address the specific conduct they seek to regulate, as well as convey their justification for that particular rule to employees.
For more information on this topic, or to learn how Godfrey & Kahn can help, contact a member of our Labor, Employment & Immigration team.