Stericycle, Inc. – The NLRB Changed the Rules for Employee Handbooks

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On August 2, 2023, the National Labor Relations Board (NLRB) decided Stericycle, Inc. and Teamsters Local 628,  returning to an employee-friendly rule for determining whether an employee handbook provision violates Section Seven of the National Labor Relations Act (NLRA).

The Workplace Rules Standard Before Stericycle

Why does the law regarding employee handbook provisions and the NLRA keep changing?

Each presidential administration installs its own members on the NLRB (the president appoints a five-person board and a general counsel with the consent of the Senate) so they can carry out the policies of that administration.

What’s at stake?

Section Seven of the NLRA guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.”

In some workplaces and locations, employees want to organize, which may involve activities that are not conducive to an efficient workplace. Employers want to run their businesses in the most efficient way possible, which often involves crafting appropriate rules and policies for how employees conduct themselves in the workplace.

Before 2017, the standard set by Lutheran Heritage Village-Livonia was relatively employee-friendly. In 2017, the new NLRB appointed by President Trump decided Boeing, which changed the standard to a more employer-friendly approach.

As expected, the new NLRB appointed by President Biden has changed the standard again in Stericycle to a more employee-friendly approach, although there are some improvements from the pre-Boeing standard.

Lutheran Heritage Village-Livonia in 2004

In 2004, the NLRB decided in Lutheran Heritage Village-Livonia that the first question the Board must consider is “whether the rule explicitly restricts activities protected by Section 7.”

If the rule doesn’t explicitly restrict protected activities, the rule may still violate Section 7 if:

  1. “Employees would reasonably construe the language to prohibit Section 7 activity,”
  2. “The rule was promulgated in response to union activity,” or
  3. “The rule has been applied to restrict the exercise of Section 7 rights.”

The Board concluded that they “must refrain from reading particular phrases in isolation,” “must not presume” that a rule will cause “improper interference with employee rights,” and should not conclude “that a reasonable employee would read [a] rule to apply to [Section 7] activity simply because the rule could be interpreted that way.”

The Board also rejected any categorical approach to rules and held that cases must be decided on a case-by-case basis.

Notably, the Board did not identify any employer interests that might weigh against a finding of a Rule 7 violation or a method to balance legitimate employer interests against an employee’s Rule 7 rights.

Boeing in 2017

In 2017, in The Boeing Company and Society of Professional Engineering Employees in Aerospace, IFPTE Local 2001, the Board threw out the Lutheran Heritage standard and decided that the Board should balance two things to determine whether a work rule violates the NLRA:

  1. The nature and extent of the impact on NLRA rights, and
  2. “Legitimate justifications associated with the rule.”

The Board also created classifications for evaluating rules including:

  • Category I – Rules that are always lawful because they don’t interfere with employee rights or because the employer’s justifications will always outweigh the employee’s Section 7 rights,
  • Category 2 – Rules that must always be scrutinized but are sometimes lawful, and
  • Category 3 – Rules that are always unlawful and can never be justified by an employer.

For example, the rule at issue in Boeing, regarding a manufacturer of military and commercial aircraft, restricted the use of cameras in the workplace. Any impact on employee rights was slight, but the employer’s justifications were significant.

The Board then went on to find that all rules of this type are always lawful, regardless of the circumstances. Similarly, the Board found that all rules requiring employees to “abide by basic standards of civility” will always be lawful.

Stericycle – the New Employee-Friendly Standard

In Stericycle, Inc., the Board decided that the Boeing standard failed to protect employee rights because it allowed employers to discourage the exercise of employees’ NLRA rights with overly broad work rules. The Board overruled Boeing, did away with the categorical approach, and returned to a variation of the Lutheran Heritage standard.

Presumptive Case Against the Employer

Under the new standard, the General Counsel must establish that a rule is presumptively unlawful by showing “that [the] rule has a reasonable tendency to interfere with, restrain, or coerce employees who contemplate engaging in protected activity.”

When determining whether the rule violates Section 7, the Board should “view employer statements from the standpoint of employees over whom the employer has a measure of economic power.”

Rebuttal of the Presumption/ Consideration of Business Interests

Unlike the Board’s 2004 Lutheran Heritage standard, however, the current Board recognizes that an employer may have legitimate business interests in maintaining a particular work rule in particular circumstances, and those legitimate business interests may have nothing to do with an employee’s Section 7 rights.

Therefore, even if the General Counsel establishes a presumptive case that a workplace rule is unlawful, the employer can then “rebut the 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.”

Impact on Employers

Employers should review their employee handbooks and policies to ensure that the company is complying with the new standards announced in Stericycle to determine whether:

  • The Board may find that one or more policies or rules violate Section 7,
  • Legitimate business interests are being served that have nothing to do with employees’ Section 7 rights, or
  • A more narrowly tailored rule can be adopted to minimize the impact on employee rights and avoid potential issues with the NLRA.

Please feel free to contact one of our Murray Lobb attorneys to obtain our advice regarding employment law matters including whether employee handbook provisions violate the NLRA under current NLRB standards. We also remain available to help you with all your general corporate, construction law, business, and estate planning needs.