When Democrats took control of the White House in 2021, most experts expected that there would be a drastic change in the direction of the decisions of the National Labor Relations Board (“NLRB”), which had been up to that point a quite hospitable forum for employers during the prior administration. Since this change, as predicted, the NLRB has issued a series of decisions that are far more deferential in nature to employee interests, and in several cases, has in fact even reversed relatively recent NLRB precedent that set far more favorable legal rules and standards for employers.
One case that was clearly in the cross hairs for possible reversal by the Board when the new administration took over in 2021 was the Boeing Co. case (2017). In Boeing Co., the Board adopted what it then believed was a more reasonable approach to evaluating whether facially neutral workplace rules violated federal labor law. The new Board was just waiting for a case to come before it that would provide a vehicle for overturning its Boeing Co. decision. In August 2023, the Board finally found that case, Stericycle, Inc. In this case, the Board seized upon the opportunity presented to drastically change the legal landscape for evaluating workplace rules and policies challenged as being violative of employee rights under federal law laws.
In Boeing Co., the NLRB previously held that it would no longer presume that workplace rules improperly interfered with employee rights simply because an employee could perceive that to be the possible case, and instead adopted a standard that would focus on the actual nature and extent of a rule’s impact on Section 7 rights, balancing that impact against the employer’s legitimate interests and justifications for the rule. Boeing created three categories of employer rules:
- Rules that, when reasonably interpreted, do not interfere with the exercise of rights protected by the National Labor Relations Act (“NLRA”), or the potential adverse impact on protected rights of which is outweighed by justifications associated with the rule;
- Rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate employer justifications; and
- Rules that are always unlawful because they would prohibit or limit NLRA-protected conduct where the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.
The idea behind this more categorical approach was to give employers greater clarity in the kinds of rules that could be problematic for employers to implement in their workplace. Stericycle, Inc. has now reversed this standard, and in essence goes back to (and almost readopts) what for many years was the legally amorphous standard that Boeing Co. was designed to replace, a past standard that frequently premised findings of NLRA Section 7 violations upon the hypothetical possibility that a reasonable employee could conclude that their right to engage in protected activities was “chilled” by the rule.
Under the new standard announced by the NLRB, if a workplace rule is shown to have a “reasonable tendency” to chill employees from exercising Section 7 rights, it is presumptively illegal. This possible “tendency” is to be interpreted “from the perspective of an employee who is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity.” According to the Board, the employer’s intent in creating the rule is “immaterial.” Now, what matters most is whether the employee could interpret the rule to have a coercive effect, even if the rule could also be reasonably interpreted as being non-coercive. Once that happens, the burden then falls on the employer to rebut this presumption of illegality by showing that the rule advances “a legitimate and substantial business interest” and that this interest could not be advanced by a more “narrowly tailored” rule, a far more dauting burden than what was placed upon employers by Boeing.
Given this new standard, employers can expect that many sensible workplace rules that were adopted to create a harmonious workplace without any desire to curb employee rights will be closely scrutinized and potentially determined by the NLRB to violate employee rights under federal labor law. Therefore, more so than ever, employers are wise to conduct prompt legal reviews of their existing employee handbooks and other workplace policies to ensure that all employer rules and policies do not run afoul of this newly issued precedent from the NLRB.
