NLRB Ruling Reflects Heightened Scrutiny of Workplace Policies

As employers are aware, it is important to review workplace rules, policies, and employee handbooks on a regular basis for legal compliance given the ever-changing landscape of federal, state, and local labor and employment laws. A recent National Labor Relations Board ruling further underscores the importance of regular review, even for employers that are not unionized. The decision, Stericycle, establishes a heightened standard for evaluating when facially neutral workplace policies unlawfully restrict employees in exercising their rights under Section 7 of the National Labor Relations Act and overturns years of Board precedents regarding work policies. The ruling raises challenging questions about how to craft work policies and how the Board will determine whether a workplace policy is impermissible when applying the new standard.

Section 7 of the NLRA provides non-managerial employees the right to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection, for example taking steps to form a union or discussing terms and conditions of employment with co-workers.  In Stericycle, the General Counsel of the Board alleged that work policies in the employer’s handbook relating to non-disparagement, conflicts of interest, confidentiality of investigations, and restricting camera and video use infringed on the employees’ Section 7 rights. Instead of applying existing law, the Board used the opportunity to establish a new standard for evaluating facially neutral work policies under Section 7. Under the previous standard established in Boeing, the Board utilized a balancing test to determine whether a workplace policy infringed upon employees’ Section 7 rights, considering the nature and extent of a given policy’s potential impact on employee rights and the employer’s legitimate justifications associated with the policy. In conducting this balancing test, the Board considered the impact of the policy on the behavior of a reasonable employee.

Under the new standard, if an employee could reasonably interpret a work policy to have a coercive meaning, the policy is presumptively unlawful, even if a contrary, noncoercive interpretation is also reasonable, and even if the employer did not intend for the policy to restrict employees’ protected rights. In addition, the Board will now examine workplace policies from the perspective of an employee who is economically dependent on the employer and contemplates engaging in protected activity, rather than the perspective of a reasonable employee.  As a result, the Board will now explicitly consider the employee’s economic dependence on their employer and consider whether a workplace policy, in conjunction with such economic dependence, might chill the employee’s willingness to engage in protected activity. The Board’s reasoning for embracing this new perspective is that employees, who are by nature economically dependent on their employer, will be more inclined to avoid violating workplace policies, and thus also inclined to avoid engaging protected activity if they anticipate such activity may violate policy, than a disinterested observer might be.

Under the new standard, if the General Counsel makes a showing that an employee could reasonably interpret a policy to restrict protected activity, such that the policy is presumptively unlawful, the employer can rebut this presumption by proving: (i) that the policy advances a legitimate and substantial business interest, and (ii) the employer is unable to advance that interest with a more narrowly tailored policy. The requirement that an employer establish that they are unable to advance their legitimate and substantial business interests with a more narrowly tailored policy will now require employers to specifically consider the NLRA when promulgating work policies and to craft them in such a way as to minimize interference with employee rights, even for policies that on their face may have nothing to do with Section 7 activity.

It is unclear, based on the decision, whether a safe harbor provision in a policy which specifically disclaims an intention to infringe on employees’ rights under the NLRA would save an otherwise impermissible or overbroad policy. While the Board did not state if such a safe harbor clause would save an otherwise impermissible policy, the Board noted that it would evaluate any explanations within a policy regarding how it does not apply to protected activity in determining whether the policy is narrowly tailored to accomplish the employer’s legitimate business purposes.

In another departure from precedent, the Board will no longer treat certain types or categories of policies as always presumptively lawful to maintain. Though any work policy may be implicated by this decision, examples of the types of policies that employers may want to reexamine in light of Stericylce include: restrictions on employees’ use of social media and bulletin boards, policies regarding the manner of internal investigations, confidentiality and non-disparagement policies, restrictions on the use of recording devices (e.g., recording meetings or conversations in the workplace), and policies limiting employee communications with the media or government agencies. Previously, employers could rely on Board rulings that certain categories of policies (i.e., those relating to the confidentiality of investigations, limited to the duration of the investigation) were always lawful. This is no longer the case, as the Board held that no category or type of policy is inherently lawful. This reversal will likely invite increased litigation, as each challenged policy must now be analyzed on a case-by-case basis considering “all important aspects of the problem posed by potentially overbroad work rules” including: “the specific wording of the rule, the specific industry and workplace context in which it is maintained, the specific employer interests it may advance, and the specific statutory rights it may infringe.”

Employers should have their workplace policies reviewed and confer with counsel to determine if the employer maintains any policies that may now be considered overbroad or unlawful in light of the Board’s decision. A good rule of thumb for employers is to have legal counsel review employee handbooks and policies on an annual basis, and before implementing any new policies, as the maintenance of an impermissible workplace policy may be considered unlawful even if the policy is not enforced. Employers may also consider keeping documentation demonstrating the reasoning behind and justifications for work rules and policies in the event they are challenged down the line. Employers with questions about Stericycle or who would like to discuss a review of their workplace policies should contact Kate Townley at ktownley@fglawllc.com or any other attorney at the firm.

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