More Work Rules May Violate NLRA in Wake of New Ruling

Author: Robert S. Teachout, XpertHR Legal Editor

August 2, 2023

More workplace rules may be found unlawful following a decision by the National Labor Relations Board (NLRB) to return to a previous, more employee-friendly standard of review under the National Labor Relations Act (NLRA).

The NLRB's 3-1 ruling in Stericycle Inc. was issued in response to an unfair labor practice complaint alleging that a company's 2015 employee handbook and policy manuals contained several rules or policies that unlawfully interfere with employees' Section 7 rights under the NLRA (i.e., the rights to unionize and to engage in collective protected activities for the purpose of collective bargaining or other mutual aid and protection).

With the Stericycle decision, the Board rescinded the standard for reviewing workplace rules in the 2017 Boeing ruling, which set three broad categories for rules: those that are always lawful; those that are always unlawful; and those that required review to balance the rights of employee against any legitimate employer interests. The majority stated that the problem with Boeing is that it permits employers to adopt overbroad work rules that chill employees' exercise of their Section 7 rights.

Instead, the NLRB will review rules on a case-by-case basis following the standard established by Lutheran Heritage in 2004. That standard said rules that don't explicitly target workers' rights may still violate the NLRA if workers would "reasonably construe" them to bar organizing.

Under Lutheran Heritage, prior Boards held ambiguous or subjectively defined rules to be unlawful because they could cause confusion among employees and discourage the exercise of their rights. Many rules regarding civility, honesty, respect, and other behavioral norms were also invalidated. 

"With Stericycle doing away with the Boeing rule and effectively returning to the Lutheran Heritage rule, employers face far more uncertainty," warns Janette Levey, founder and principal at Levey Law LLC in New Jersey. "They may want to start by reviewing those rules more commonly challenged by employees and determine what, if any, legitimate interests those rules advance and whether it is possible to create narrower rules that still meet their legitimate business and safety needs." Levey also recommends that employers consider getting help and guidance from employment counsel.

Standard of Review

In an unfair labor practice claim involving workplace rules, the NLRB General Counsel first must make a showing that an employer's rule is presumptively unlawful. Then the Board will consider employer interests when evaluating the employer's rebuttal to the General Counsel's showing that a rule is presumptively unlawful. The majority made clear that the employer bears the burden of proving the rule should be deemed lawful by showing that:

1. A rule is legitimate; and
2. Their substantial business interests cannot be accomplished with a more narrowly tailored rule.

The Board majority stated that the new standard gives employers the necessary leeway to maintain rules of their own choosing to advance legitimate and substantial business interests. "They simply need to narrowly tailor those rules to significantly minimize, if not altogether eliminate, their coercive potential," the Board said. "If employers do so, their rules will be lawful to maintain."

Member Kaplan, the dissenting vote and sole Republican on the Board, admonished the majority for their criticism of Boeing as giving "too much weight to employer interests" and "too little weight to the burden a work rule could impose on employees' Section 7 rights," while at the same time failing to explain why their standard is any better. Kaplan noted that the new standard claims to balance these interests but "inherently privileges employee rights while placing scant, if any, weight on employer interests." Kaplan was in the majority in the Boeing decision, while current NLRB Chairman McFerran dissented.

The standard established in Stericycle will be applied retroactively to all pending cases coming before the Board.