United States: NLRB Reverses A Prior Reversal: Employer Handbooks Face Scrutiny Under NLRB Decision In Stericycle, Inc.

On August 2, 2023, the National Labor Relations Board ("NLRB") issued a new legal standard to determine whether an employer's workplace policy is "facially unlawful" under Section 8(a)(1) of the National Labor Relations Act. In the Stericycle, Inc., 372 NLRB No. 113 ("Stericycle") decision, the NLRB introduced a new framework: the NLRB General Counsel must show that a challenged rule has a "reasonable tendency" to chill employees from exercising their Section 7 rights.¹ The NLRB stated that the decisionmaker must conduct this analysis from the perspective of a reasonable employee who is: (1) subject to the rule at issue; (2) economically dependent on the employer; and (3) who is considering exercising their Section 7 rights under the NLRA. Furthermore, an employer's intent behind the rule or policy is not factored into this analysis.

This decision also resulted in the overturning of two Trump-era NLRB decisions - Boeing Co. (2017) and LA Specialty Produce Co. (2019) - in which the NLRB had crafted a balancing test to evaluate facially neutral handbook policies and employer rules. This test had required the decisionmaker to examine the nature and extent of the potential impact of these policies and rules on employees' rights under the National Labor Relations Act ("NLRA") and balance that impact against the "legitimate justifications" associated with these policies and rules.

In Stericycle, the majority of the NLRB returned to a modified version of the framework that the Board implemented in its 2004 Lutheran Heritage decision. The NLRB argued in Stericycle that the Boeing Co. and LA Specialty Produce Co. standard allowed employers to enact policies that may be deemed overbroad and might chill employee's exercise of their Section 7 rights. The Stericycle decision also overturned Boeing's automatic acceptance of certain categories of work policies as always lawful; instead, Stericycle emphasized a case-by-case evaluation of workplace rules.

The NLRB confirmed that an employer still has the right to rebut the presumption of an "unlawful" work rule by proving that (1) the rule advances a "legitimate and substantial business interest" and (2) the employer is unable to advance that interest with a more narrowly tailored rule. If the employer is successful in its argument, the work rule remains lawful, even under the employee-friendly Stericycle standard. However, employers will be required to show that their policy or rule was the most narrowed option possible. The Stericycle decision applies to both non-union and union workplaces and also applies retroactively.

Under the Stericycle, Inc. standard, employers of private sector workers should reevaluate their handbooks and other workplace policies (especially non-solicitation and confidentiality rules) to ensure that their implementations do not lead to a "reasonable tendency" to prevent employees from engaging in protected activity. Employers who have any questions related to their handbooks or workplace policies should contact Butler Snow's Labor & Employment group for assistance.

Footnote

1 Section 7 guarantees most employees certain rights such as the right to self-organization; to form, join, or assist labor organizations; and to bargain collectively.

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