Michigan Labor & Employment Law Blog

NLRB Puts Employment Handbooks Under More Scrutiny

Employers often have workplace policies which are typically contained in an employment handbook. These handbooks may include policies regarding the confidentiality of business information, the use of cell phones during work, employer internal investigations, the taking of pictures and recordings at work, and not bad-mouthing the company, among others. On August 2, 2023, the National Labor Relations Board (NLRB) issued a decision that will have a major impact on employers seeking to implement and enforce workplace rules and policies.

In its Stericycle, Inc.^[1] decision, the NLRB held that an employer’s facially neutral work rule or policy could be found to violate an employee’s National Labor Relations Act (“NLRA”) Section 7 rights to organize and bargain collectively if the policy has a "reasonable tendency" to discourage employees from exercising those rights. (See Why You Should Care About Federal Labor Law Even If You Have A Non-Unionized “At-Will” Workforce).

Under the new standard, if an employee establishes a reasonable belief that a challenged policy or work rule violates their Section 7 rights, the policy or rule is presumed to be unlawful under NLRA Section 8(a)(1)^[2]. In that event, an employer that wants to keep its policy or rule in place must prove (i) that it has a compelling business reason for the rule, and (ii) that a narrower rule will not achieve the employer’s business objectives for the rule. If the employer cannot establish these two requirements, the policy or rule is unenforceable.

Background

Prior to Stericycle, employee challenges to employer policies were reviewed under a standard created by the NLRB in its 2017 Boeing Co.^[3] decision. There, the NLRB evaluated a challenge to a policy prohibiting the use of cameras and similar devices (such as cell phones) on company property. The NLRB created a three-category system for assessing whether employer policies violated Section 8(a)(1):

1. Policies considered categorically legal because any reasonable interpretation of such policies would show they do not prevent an employee’s exercise of Section 7 rights, or the reasons for the policy clearly outweigh any impact on Section 7 rights (such as rules requiring employees to maintain confidentiality of workplace investigations);
2. Policies considered categorically illegal on their face, such as rules prohibiting employees from discussing with each other their wages and benefits; and
3. Policies that could be considered legal and sometimes be considered illegal. For policies in this category, the determination whether a rule was legal or illegal was based on a balancing test that weighed an employer’s legitimate business interests for implementing the challenged policy, versus the effect the policy would have on an employee’s exercise of Section 7 rights.

The Stericycle Decision

The Stericycle majority overruled the Boeing standard for evaluating employer policies, saying that it allowed employers to issue “overbroad work rules that chill employees’ exercise of their rights under Section 7 of the Act”^[4]. Referencing what it called employees’ “economic dependency on the employers”, the NLRB also said that Boeing “gives too little weight to the burden a work rule could impose on employees’ Section 7 rights”, and that it “condones overbroad work rules by not requiring the party drafting the work rules—the employer—to narrowly tailor its rules to only promote its legitimate and substantial business interests while avoiding burdening employee right”^[5].

In place of Boeing, the NLRB established a two-part test. First, when challenging an employer policy or work rule, an employee must prove that the employee can reasonably interpret the rule to have a “coercive meaning” that may restrain the employee from exercising Section 7 rights. The NRLB will review “the specific wording of the rule, the specific industry, and workplace context in which it is maintained, the specific employer interests it may advance, and the specific statutory rights it may infringe”^[6]. Using this approach, regardless of an employer’s reasons for implementing the challenged policy, the policy will be considered “presumptively unlawful” if it has a “reasonable tendency” to discourage employees from exercising Section 7 rights.

The second part of the Stericycle test is used if an employee proves that a rule is presumptively unlawful. In that case, an employer seeking to overcome the presumption must prove 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”^[7]. If the employer can meet this higher burden, the rule will be found lawful. However, the opinion offers little analysis or comment about what the NLRB will consider a legitimate and substantial interest sufficient to overcome the presumption.

Recommendations for Employers

The Stericycle decision is effective immediately and applies retroactively to unfair labor practice claims already filed with the NLRB but not yet decided. It also applies to employer policies written and implemented by employers prior to the date of the decision and affects unionized and non-unionized employers, who may now face increased NLRB review of their policies and work rules.

In the wake of Stericycle’s change in NLRB standards for review of employer policies and work rules, we recommend that employers promptly review their current policies, work rules and employee handbooks to assure compliance with the new standard. Employer reviews should consider the lower standard adopted by the Board for determining that a challenged policy is presumptively unlawful, and that the Board will examine policies and rules from the perspective of the employee who wishes to engage in Section 7 activities.

Policies and work rules found to be potentially in violation of the new standard should be revised, if possible, to the narrowest scope that will still support the employer’s legitimate and substantial business interests. If the employer’s policies cannot be narrowed, employers should carefully document the reasons why a narrower policy will not achieve the employer’s substantial business interest.

For additional assistance in reviewing your Company’s policies and work rules, please contact a member of our Employer Services practice group.

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[1] Stericycle, Inc., 372 NLRB No. 113 (2023).
[2] Section 8(a)(1) prohibits an employer from interfering with employees exercising their Section 7 rights.
[3] 365 NLRB No. 154 (2017).
[4] Stericycle, Inc., page 1.
[5] Id.
[6] Id., page 13.
[7] Id., page 14.

Categories: Employee Handbook, Employment, Labor Relations, National Labor Relations Board