Since 2017, employers have been able to rely on The Boeing Company, 365 NLRB No. 154 (2017) (“Boeing”), for relatively clear guidance on the lawfulness of their work rules (including employee handbook policies and manuals). In Boeing, the Board delineated categories of work rules: certain rules were always lawful; other rules were always unlawful; and all other rules would require individualized scrutiny under a balancing test weighing the rule’s impact on employees’ protected NLRA rights against the employer’s legitimate business interests in maintaining the rule. Employers generally welcomed the Boeing standard because it provided greater clarity and predictability about the lawfulness of common work rules, and because the Boeing balancing test gave considerable weight to the employer’s business reasons behind its work rules.
In Stericycle, Inc., 372 NLRB No. 113 (2023)(“Stericycle”), the NLRB rejected the Boeing framework and returns to its pre-2017 approach to work rules, with a slight modification. In reviewing an employer’s work rule, the first question is whether that work rule has a reasonable tendency to cause a chilling effect on a worker’s right to engage in protected labor activities. The rule will be presumptively unlawful if the work rule could reasonably be interpreted by employees as limiting their NLRA rights. The Stericycle Board explained that under this test work rules should be read from the perspective of “an employee who is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity.” If such an employee “could reasonably interpret the rule to have a coercive meaning,” the work rule will be presumptively unlawful, even if a contrary, noncoercive interpretation of the rule is also reasonable. In other words, under this standard, the NLRB will put itself in the shoes of an employee who is considering engaging in protected concerted activity; if the Board believes that the employer’s work rule(s) could leave such an employee unsure as to whether the employee’s contemplated activity would violate the rule, the rule will be held unlawful.
A new wrinkle added by Stericycle is a limited potential defense for employers. Where a work rule fails the new test, an employer can rebut the presumed unlawfulness of the rule by proving that the work rule (1) advances a legitimate and substantial business interest and (2) the employer cannot advance that interest with a more narrowly-tailored rule.
How this test and potential defense will play out in practice remains to be seen. The Board did not apply the new standard to the policies at issue in Stericycle, instead remanding the case for further proceedings under the new standard.
Also left unanswered by the Stericycle Board is whether, and to what extent, traditional disclaimers used by employers to insulate their policies and work rules (e.g., “nothing in this handbook should be construed as restricting your Section 7 rights…”) will be sufficient under the new standard. The Board specifically left this question open for a future case.
Despite these open questions, employers should know that under the new standard many work rules that were lawful under Boeing are now unlikely to pass legal muster. Those who are dismissive of employee handbook violations as a minor slap on the wrist should understand that these violations can become problematic for employers who are (or who might one day be) contesting a union organizing campaign, and for employers who seek to promote a “clean” workplace violation record for government contracting or other reporting purposes. Therefore, employers are advised to review their work rules and employee handbook policies under the new standard.
