On August 2, 2023, the National Labor Relations Board (“NLRB” or “Board”) issued its anticipated ruling in Stericycle, Inc., reversing the Trump-era Boeing decision that famously implemented a three-category test for balancing whether workplace rules unlawfully interfered with employees’ rights to engage in “protected concerted activity” under Section 7 of the National Labor Relations Act (“NLRA” or the “Act”).
Proclaiming to advance a “modified version” of the Obama-era Lutheran Heritage framework, the Board in Stericycle returned to Lutheran Heritage’s central framework of finding workplace rules violate the Act if it has a “reasonable tendency to chill employees from exercising their Section 7 rights.” Enforcement of a rule to specifically stifle protected conduct is not required; merely maintaining an over-broad work rule violates the Act, according to Stericycle. However, the new Stericycle standard provides employers with an opportunity to rebut a finding that their work rule violates the Act by demonstrating that:
(1) the rule advances “legitimate and substantial business interests”
(2) which “cannot be achieved by a more narrowly tailored rule.”
While the first element to that defense provides a platform for argument and may not be a heavy burden to carry, the second element appears quite strict in nature, if not impossible to establish in fact.
The Stericycle Board criticized the now-overruled Boeing decision as having “dispens[ed] with individualized scrutiny for rules by ignoring their wording, whether they were narrowly tailored, and their context.”
Dissenting, Member Kaplan warned that the Stericycle standard “makes it nearly impossible for employers to defend their rules in furtherance of legitimate employer interests.” In that regard, Member Kaplan suggested that even the most carefully crafted work rules, such as those requiring employees to “work harmoniously with other employees” will not be able to survive the Stericycle analysis. Other work rules likely to fall victim to the Board’s Stericycle standard include no camera rules, confidentiality rules, and non-solicitation rules, among others.
Under the new standard, the Board will evaluate work rules from the perspective of an “economically dependent employee” to determine whether they have a “reasonable tendency to chill” protected conduct. If so, the Company will have to overcome the Board’s demanding test by proving, to the satisfaction of this union-friendly Board, that the work rule in question not only advances a legitimate business interest but that it was also the most narrowly tailored rule possible to achieve those underlying business interests.
The NLRB in Stericycle remanded the case back to the Administrative Law Judge to determine whether, under the newly announced standard, certain “personal conduct, conflicts of interest, and investigative confidentiality” rules violate the Act.
In light of the NLRB’s recent push to expand the scope of remedies it will issue for violations of the Act and its related union-friendly agenda, employers should carefully review their employee handbooks and other work rules to ensure compliance with the Board’s decision in Stericycle.
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