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Labor Board Issues a Blow to Workplace Conduct Policies

Source: Fisher Phillips, August 3, 2023

The National Labor Relations Board (NLRB) just changed the law again on employee handbooks by modifying the legal standards that for the past six years have provided a commonsense solution for evaluating workplace misconduct rules. Yesterday’s decision will dramatically impact employers across the country, leading many to once again modify their handbooks to ensure compliance with the latest NLRB mandates. While some employers already review their handbooks on a yearly basis, it may be important to do so more frequently in light of this ruling – and the additional decisions and guidance memos that are expected in the months and years to come. Here’s what you need to know about the August 2 decision in Stericycle, Inc. and how your policies may need to be updated.

What Changed?

The NLRB issued its long-awaited decision in Stericycle, Inc. yesterday, overturning its more employer-friendly Boeing decision, which had governed agency doctrine on workplace conduct policies for the past six years.

Under the new standard, the Board analyzes whether an employee “would reasonably construe” the applicable rule or policy as chilling protected conduct under Section 7 of the National Labor Relations Act. To avoid a violation, employers must now show that workplace conduct rules are narrowly tailored to special circumstances justifying any infringement on employee rights. With the Stericycle decision, the NLRB now returns to a test similar to its Lutheran Heritage standard, which was in effect before Boeing.

The decision does away with three categories of policies that were introduced in Boeing:

  1. rules that are presumptively lawful;
  2. those that must be evaluated on a case-by-case basis to see whether they prohibit or interfere with NLRA rights and whether any adverse impact is outweighed by legitimate business justifications; and
  3. rules that are presumptively unlawful.

In their place, the new standard subjectively examines whether a workplace rule or policy has a reasonable tendency to interfere with employees’ exercise of Section 7 rights. In other words, if an employee could reasonably interpret the rule to be coercive (even if a noncoercive interpretation is also reasonable), then the burden shifts to the employer to justify it.

Employers may rebut this presumption only by proving that the handbook rule advances a legitimate and substantial business interest, and that they are unable to advance that interest with a more tailored iteration. A handbook rule remains overbroad when “it could be narrowed to lessen the infringement of employees’ statutory rights while still advancing the employer’s interest…” and any ambiguous rules will be construed against the employer.

Here are three additional points to note about what has changed under the new standard:

  • The NLRB will take a case-by-case approach. Unlike the prior Boeing standard, the new test will assess workplace rules on a case-by-case approach, so employers should expect to see new cases in the coming months to clarify how this standard will be applied in practice.
  • The new standard applies retroactively. Which means all employers should consider reviewing their policies now to ensure that they comply. While the new standard does not necessarily invalidate an entire handbook, it does mean that certain provisions could now be deemed unlawful. That could lead to any application of those policies for disciplinary or related purposes to subject employers to unfair labor practice charges on a retroactive bases, along with the potential for back pay and other damages.
  • Disclaimers should be reviewed. Many employers will add a disclaimer to their handbook to note that the policies are not intended to interfere with employees’ Section 7 rights, but this alone may not be sufficient to avoid violating the new standard – particularly with respect to policies that are otherwise deemed to be coercive or overly broad. Employers should therefore act now before they are subject to an unfair labor practice claim for the application of policies that may have passed under the Boeing standard.

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