Earlier this month, the National Labor Relations Board (the NLRB or the Board) released its highly anticipated decision in Stericycle Inc. The decision establishes a new, employee-friendly standard by which the Board will evaluate the legality of facially neutral workplace rules. The new standard applies equally to union and non-union workforces. Employers should be aware of this decision, as the contents of their handbooks could now inadvertently be putting them at risk.

The New Standard for Analyzing Workplace Rules

Previously, the Board would review a workplace rule that did not expressly restrict NLRA Section 7 rights (the right to, for example, join a union, bargain collectively, discuss company policies, etc.) by balancing the rule’s potential impact on employees’ rights with the employer’s legitimate justifications for the rule.

The Stericycle decision changes the analysis and introduces a novel two-step standard under which employers carry the ultimate burden of demonstrating that their rules are lawful.

At Step One, the General Counsel of the NLRB must show that a challenged workplace rule “has a reasonable tendency to chill employees from exercising their Section 7 rights.” If the General Counsel makes this showing, the rule is presumptively unlawful. This means that the Board will consider a workplace rule presumptively invalid if its existence or substance could reasonably lead an employee to feel unable or afraid to exercise any of the myriad of rights they have under Section 7.

At Step Two, if the General Counsel has satisfied this relatively low bar, the burden shifts to the employer to prove both that “the rule advances a legitimate and substantial business interest” and that the employer could not fashion a more narrowly tailored rule to advance this interest. The Board does not provide any real insight on how employers can successfully carry this burden, other than to explain that it will look to the entire context surrounding the rule including its language and the rights it could impinge on. The Board does note, however, that explicit “safe harbor” provisions which disclaim any intention to infringe on Section 7 rights cannot be relied upon to save otherwise invalid rules. The Board signaled that, instead, employers should consider explanations or illustrations contained in the rule to explain how the rule does not apply to Section 7 activity.

Employee-Friendly Interpretation of Workplace Rules

In Stericycle, the Board stressed that it will conduct the above review of workplace rules “from the perspective of an employee who is subject to the rule and economically dependent on the employer, and who contemplates engaging in protected concerted activity.” In practice, this means that the intent of the employer in maintaining its workplace rules is “immaterial,” and what matters is instead whether an employee “could reasonably interpret the rule to have a coercive meaning.” This is the case even if the rule could be reasonably interpreted multiple ways and “even if a contrary, non-coercive interpretation of the rule is reasonable.” This signals loud and clear that the Board will be approaching its review of workplace rules from an explicitly employee-friendly perspective.

Takeaways

First, employers should review their handbooks with an understanding that all their workplace rules fall under the scope of this decision. Employers should specifically look at areas that might interact with an employee’s Section 7 rights, such as personal conduct policies, investigative confidentiality rules, non-disparagement provisions, and rules related to workplace civility. 

Second, employers should understand that the Board will now place on them a heavy burden to narrowly tailor their workplace rules. In practice this means employers should think deeply about how their rules relate to the conduct of their business, and employers should be able to justify rules that they do have in place.

Third, employers should understand the pro-employee framing that the Board will be employing when scrutinizing workplace rules. With this in mind, employers should review their rules from this perspective, potentially clarifying ambiguous rules or better tailoring them to the conduct of their business. This also could mean narrowing or adding detail to rules already in place or, like the Board notes, providing illustrations or examples to rules so that employees better understand that the rule does not impinge on their Section 7 rights.  

Lastly, employers should watch for further decisions or guidance by the NLRB. The Board was explicit that this decision would not provide much in the way of detail or application. That said, it is always possible that the Board or its General Counsel could provide further elucidation either through memorandums or later cases.