NLRB Adopts Employee-Friendly Test for Evaluating Workplace Rules
The National Labor Relations Board issued its decision in Stericycle, Inc. on Aug. 2, adopting a standard that places employment policies and workplace rules under greater scrutiny. Employers may now have added responsibility to ensure policies and rules can’t be seen as having a “reasonable tendency” to dissuade employees from exercising their Section 7 rights under the National Labor Relations Act (NLRA).
In adopting this standard, the Board reversed two Trump-era decisions, Boeing Co. (2017) and LA Specialty Produce Co. (2019). Boeing held that when analyzing challenges to facially neutral work rules, the Board would evaluate and balance two factors: “the nature and extent of the potential impact on NLRA rights, and [the] legitimate justifications associated with the rule.” Boeing also established categorical approaches to certain work rules, under which some rules would always be considered lawful.
According to the Board in Stericycle, Inc., “the primary problem with the standard from Boeing and LA Specialty Produce is that it permits employers to adopt overbroad work rules that chill employees’ exercise of their” Section 7 rights. As a result, Stericycle, Inc. creates a standard to be applied on a case-by-case basis to work rules challenged as facially unlawful under the NRLA.
Under this standard, the employee must first establish a challenged workplace rule has a reasonable tendency to chill employees from exercising their rights. If the employee makes this showing, the challenged rule is deemed presumptively unlawful. However, the employer may rebut this presumption by establishing that the challenged rule advances a legitimate and substantial business interest and if the employer cannot advance that same interest with a more narrowly tailored rule. If the employer makes this showing, then the challenged rule will be found lawful. In establishing this standard, the Board also rejects Boeing’s categorical approach that led to certain work rules being considered always lawful to maintain, calling it “rigid” and “arbitrary.”
Stericycle, Inc. muddies the waters for employers. The decision likely will give rise to ambiguity in evaluating what constitutes a “reasonable tendency” to dissuade employees from organizing activity. It introduces a greater level of uncertainty into the enforcement of what may otherwise be innocuous employment policies. The decision also increases the risk that otherwise unacceptable workplace conduct by employees may enjoy protection under the NLRA. Put simply, the Board’s decision is likely to generate additional litigation in the coming months and years as employers and employees grapple with the new test.
Please contact Nick Morisani or any member of Phelps’ Labor and Employment team if you have questions or need compliance advice and guidance.
