Key Takeaways:

• General workplace rules are considered “presumptively unlawful” under the new NLRB standard if they could be interpreted to limit employee rights.

• Employers must now rebut the presumption of unlawfulness for workplace rules and regulations.

• Employers should consider reviewing workplace rules and employee handbooks in light of the new standard.

On August 2, the National Labor Relations Board issued a decision in Stericycle, Inc. and Teamsters Local 628 (372 NLRB No. 113 (2023) that upends the legal standard for evaluating employer work rules. The decision overrules the standard from Boeing Co. (2017), which was later refined in LA Specialty Produce Co. (2019).

The underlying matter analyzed an employee handbook policy that required employees to act “civilly and refrain from damaging the employer’s reputation.” The NLRB determined that the policy violated the employee’s rights. The Board found that the “primary problem with the standard in Boeing and LA Specialty Produce is that it permits employers to adopt overbroad work rules that chill employees’ exercise of their rights.”

Under the new standard, employer policies and rules will be viewed from the perspective of a lay employee who contemplates engaging in protected concerted activity and is fearful of financial consequences that may result in the employee’s inability “to pay rent or put food on the table.”

To make the standard even more employee friendly, the NLRB will no longer consider “the employer’s intent in adopting the rule or the intent in maintaining the rule.” Instead, workplace rules are now “presumptively unlawful” if they can be interpreted as infringing on employees’ rights.

An employer can rebut the presumption of unlawfulness “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.”

Board member Marvin Kaplan disagreed with the decision and argued in his dissent that the decision fails to balance the legitimate business interests of employers against employees’ rights. For example, Kaplan disagrees with the the majority’s determination that keeping workplace investigations confidential violates the rights of the employees. Kaplan argues that by failing to keep the investigation confidential, employers could be acting “contrary to EEO and OSHA workplace-investigation guidance” which could potentially put them at risk for liability with other administrative agencies.

This decision demonstrates that the NLRB continues to move toward a general loosening of employee restrictions as demonstrated with its previous decisions and memorandum opinions on such issues as non-disparagement and confidentiality clauses.

Employers found to maintain unlawful rules could be ordered to have the rule(s) removed or replaced and the employer may be forced to post and distribute notices to employees acknowledging the violation. Unlawful rules could also conceivably be used as evidence of anti-union animus during union organizing campaigns or by employees that have been subjected to adverse employment actions.

Although the fallout of the Stericycle, Inc. decision may not be truly understood for some time, employers should take time to review workplace policies and rules to insure that they are reasonably tailored and support the true business interests of the employer. Employers should also keep in mind that policies and rules must also comply with local, state and federal laws and the guidance and standards of administrative agencies.