New Rules for Your Rules: NLRB’s Stericycle Decision Sets New Process for Judging Lawfulness of Employer Rules, Policies, and Handbooks

On Aug. 2, 2023, The National Labor Relations Board (NLRB) announced the legal standard it will use to judge whether an employer’s rules and policies are lawful. NLRB decisions apply to unionized and non-unionized employers alike. The new case is Stericycle, Inc. and Teamsters Local 628 (Stericycle).

Beginning immediately, the NLRB will use a two-step process to judge a challenged employer rule or policy:

Step One: The NLRB’s General Counsel must prove that the challenged rule has a reasonable tendency to chill employees’ exercise of their rights under the National Labor Relations Act (the Act). If the General Counsel proves this, the rule or policy is presumed to be illegal.

Step Two: The employer may rebut that presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule. If the employer proves its defense, the rule will be found lawful.

What This Means:

If the NLRB challenges an employer’s rule or policy, its General Counsel must prove to the NLRB that the rule or policy could reasonably deter employees covered by the rule from engaging in their rights to form, join, or assist a labor organization (union), to bargain collectively with the employer, or to engage in other concerted activities for “mutual aid and protection.” These long-established rights are guaranteed by Section 7 of the Act and, collectively, are “protected concerted activity.” If the General Counsel proves this to the NLRB’s satisfaction, the employer then has an opportunity to show that it has a legitimate and substantial business interest in having that rule and that interest cannot be protected by using a more specific rule.

Other Things To Know:

  • This standard applies to rules that are “facially neutral,” where it cannot be obviously determined by the language of the rule or policy that it could deter employees from participating in union and collective bargaining activities.
  • Rules that specifically deter protected concerted activity are illegal, regardless of the employer’s business interest in maintaining the rule, and are not subject to this two-step process.
  • An employer’s rules and policies are interpreted from the viewpoint of the employees over whom the employer has some economic power.
  • What the employer intended by the rule is immaterial.
  • The decision expressly does “not disturb the Board’s long-established doctrines covering work rules that address union (or other protected) solicitation, distribution, or insignia.”
  • One unanswered question from the decision is what effect, if any, a legally sufficient disclaimer noting that a policy is not intended to interfere with protected employee activity would have on the NLRB’s determination regarding whether a policy fails step one of the test above.

How This Affects All Employers:

  • All employers’ rules and policies — except those that on their face prohibit some form of concerted activity — are subject to this two-step analysis for the NLRB to determine if a rule is unlawful or if it may be applied as the employer wrote it.
  • The NLRB’s assessment of both union and non-union employers’ rules is not new. The use of this two-step method to determine lawfulness is new.
  • The employer does not have to actually apply a rule to an employee for the NLRB to challenge it. It is enough if the employer has promulgated the rule and it could be applied to employees.
  • The NLRB has challenged the rules of both union and non-union employers for many years under various standards. The NLRB’s challenge to employer rules is not new: this Stericycle analysis is new.
  • This new standard does not provide any new guidance for employers to use in determining which “facially neutral” rules could chill an employee’s engagement in protected concerted activity. For example, the challenged rules in Stericycle involved personal conduct, conflicts of interest, and investigative confidentiality. Stericycle provided no answer to whether these rules were or were not lawful. The case was remanded to the Administrative Law Judge to apply the new standard to the rules. Some indication of how the NLRB may view a particular rule may be discernable from past challenges of similar rules.

Next Steps for Employers:

Employers should work with counsel to review all rules, regulations, and policies — including those in their employee handbooks — to analyze whether any of them could reasonably dissuade an employee who is economically dependent on the employer from engaging in concerted activity and risking discipline or discharge.

Taft will host a webinar offering additional analysis of this decision on Aug. 15. Please watch for a separate communication about this webinar.

If you have questions, please contact a member of Taft’s Employment practice group.

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