Fairly quiet so far after new standard is adopted for challenging workplace rules under the NLRA. But stay tuned…..
ABSTRACT: The NLRB’s Stericycle decision was the subject of hundreds of articles and employment law blogs when issued in August 2023, due to its adoption of a new employee-friendly standard for challenging workplace rules as unlawful under the NLRA. Employers were plainly fearful of what was to come. Since then, however, things have seemingly been relatively quiet on the topic. But the Board has remanded for further consideration some pending cases in which Administrative Law Judges reviewed workplace rules under the previous Boeing standard. Join us for a quick status update, as we examine a few recent decisions issued by the NLRB that touch on this new standard.
The NLRB issued the Stericycle, Inc. decision, 372 NLRB No. 113 (2023), last August, which was widely reported on and the subject of many blog posts because the Board had adopted a new legal standard for evaluating employer work rules (i.e., handbook policies) that were challenged as “facially unlawful” under Section 8(a)(1) of the National Labor Relations Act. That decision threw employers into a tizzy, leaving them concerned about potential attacks on their Employment Handbooks and other workplace policies, and rightfully so. Surprisingly, since August it has been relatively quiet with the NLRB not making much noise about workplace policies. For this reason, we sought out and reviewed some of the most recent decisions to see where things stand on Stericycle.
First, let’s talk briefly about the new Stericycle standard. It focuses on whether a workplace rule could reasonably be interpreted to chill employees Section 7 rights, and the General Counsel’s burden is to prove that a challenged workplace rule has a reasonable tendency to chill employees from exercising their rights. The Stericycle Board found that “if an employee could reasonably interpret the rule to have a coercive meaning, the General Counsel will carry her burden,” creating a presumption that the rule is unlawful “even if a contrary, noncoercive interpretation of the rule is also reasonable.” Another critical change was that the Board will now analyze the workplace rule from the perspective of an “economically dependent” employee, who contemplates engaging in protected activity. Under Stericycle, the employer may rebut the presumption that its workplace rule is unlawful by establishing that the rule advances a “legitimate and substantial business interest” and that the employer is not able to advance that interest with a more narrowly tailored rule. The employer’s intention in creating the rule is irrelevant. Previously, the Board had applied the standard set forth in its Boeing decision (365 NLRB No. 154 (2017)), where it would determine whether employee Section 7 rights had been infringed, by balancing the nature and extent of the potential impact on NLRA rights, against an employer’s legitimate justifications associated with the rule. This would be examined from the perspective of an "objectively reasonable employee who is aware of his legal rights but who also interprets work rules as they apply to the everydayness of his job."
Since the Stericycle ruling, the Board has remanded several pending cases challenging workplace policies, where the Administrative Law Judge had applied the Boeing standard in reaching a determination. Here is a summary of a few of those decisions:
In Phillips 66 Company and Wayne Micheal Terrio, Case 15-CA-263727, decided on December 6, 2023, the Board largely upheld an ALJ’s ruling (under Boeing standards) sustaining the validity of several workplace policies, finding that they passed muster under Stericycle. But the ALJ’s ruling on a work rule restricting employees’ use of cameras did not pass Board scrutiny.While the Judge had found the employer’s rule to be categorically lawful under Boeing, the Board noted that the recent Stericycle case rejected the categorization of certain types of work rules as always lawful to maintain. For this reason, the Board severed and remanded the issue of whether the camera-use work rules were unlawful under Stericycle back to the ALJ.
Likewise, in Harbor Freight Tools USA and Daniel Ruiz, Sr., Case No. 28-CA-232596, the Board reviewed exceptions submitted to the ALJ’s decision after a 2020 trial. This underlying case involved a complaint that alleged three workplace policies in an Employee Handbook violated Section 8(a)(1).
The challenged policies were a “Proprietary and Confidential Information” policy, a “Social Media and Networking Guidelines” policy, and a “Solicitation and/or Distribution” policy. The ALJ found the first and third policies violated the National Labor Relations Act. In reviewing the decision, the Board affirmed the Judge’s finding that the portion of the “Solicitation and/or Distribution” rule restricting employees’ solicitation activity was overly broad in violation of Section 8(a)(1). The Board severed and remanded the complaint allegations related to the “Proprietary and Confidential Information” policy, directing the Judge to consider the policy under the new Stericycle standard.
Interestingly, the employer’s solicitation policy was determined to be overbroad because it failed to clarify that the solicitation restriction did not apply to working areas during non-working time. Under the current standards, while an employer may ban solicitation in work areas during working time, an employer may generally not extend the solicitation ban to work areas during non-working time. See Stoddard-Quirk Mfg. Co., 138 NLRB 615 (1962). While the rule expressly allowed the employees to solicit coworkers during breaks, lunches, and other non-working times, it was determined the workplace rule unlawfully limited the solicitation to non-work areas.
In this regard, in its December 2023 decision, the Board ordered the employer to cease and desist from maintaining an overly broad work rule that prohibits nonretail employees from engaging in protected solicitation during non-working time in working areas and that prohibits retail employees from engaging in protected solicitation in non-selling areas of a retail store, including any areas where retail employees perform “actual work” and “any areas where customers or clients may congregate or employees may perform work.” Based on this ruling, employers may be wise to review for compliance any policies limiting or restricting workplace solicitation.
Regarding the “Proprietary and Confidential Information” policy, since the underlying decision finding that policy unlawful had been based on the application of the former The Boeing Co., standard, the Board severed and remanded the workplace policy issue to the ALJ, directing the Judge to consider the policy under the new Stericycle standard.
Similarly, in ExxonMobil Global Services Company and Leo R. Suarez, Case 16-CA-269606, the Board reviewed an ALJ ruling on a complaint that a “Corporate Assets Policy” violated Section 8(a)(1). In evaluating the workplace rule, the ALJ had applied the former Boeing standard. As a result, the Board remanded the case to the ALJ and directed the Judge to address the complaint allegations under the new standard adopted by Stericycle. Responding to a dissenting opinion, the Board made clear that Stericycle created a new standard, in that it makes explicit that an employer can rebut the presumption that a rule is unlawful by providing that it advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule. The dissenting board member, however, took issue with the Board’s decision to remand the case. The dissenting Board member argued that remand was futile as no judge could possibly find a rule unlawful under Boeing, as the ALJ had, but lawful under Stericycle. For this reason, the dissenter took the position remand was simply a waste of everyone’s time and money.
TakeawayAlthough it has been relatively quiet the past several months with little to no cutting-edge post-Stericycle NLRB decisions on challenged workplace rules, as expected, workplace policies continue to be challenged as unlawful under the NLRA. Presently, due to its retroactive application of the new Stericycle decision, the Board is routinely remanding cases that come up for review decided under the former Boeing standard and directing the administrative law judges to evaluate the challenged policies under the Stericycle standard. Stay tuned as these cases and others make their way through the system and we begin to obtain a clearer view of the impact of the new standard.