NLRB Issues Strict New Test For Workplace Rules

On August 2, 2023, the National Labor Relations Board (Board) adopted a new, heightened test for determining whether workplace rules are lawful under Section 7 of the National Labor Relations Act (NLRA). The new rule, set forth in Stericycle Inc., 372 NLRB No. 113 (2023), is applicable to nearly all private employers, regardless of whether their employees are represented by a union. 

The Biden Board tossed out the flexible, two-step balancing test adopted by the Trump Board in Boeing Co., 365 NLRB 154 (2017) to evaluate facially neutral workplace rules. Under the Boeing test, the first step was to determine whether the workplace rule reasonably interferes with an employee’s right to participate in protected concerted activity under Section 7 of the NLRA. If the workplace rule was found to reasonably interfere, the second step of the Boeing test consisted of balancing the employer’s legitimate justifications for the rule against the nature and extent of the interference with employees’ Section 7 activity. The Trump Board’s adoption of the Boeing test ended the Obama Board’s long war on employers’ workplace rules through its abuse of the “Lutheran Heritage standard” to find unlawful workplace rules that would be “reasonably construed” by employees to limit or “chill” their right to engage in protected concerted activities.

In Stericycle, the Biden Board revived the Lutheran Heritage approach to analyzing workplace rules, using an even more stringent test. Under the new test, an employer’s workplace rule will be deemed “presumptively unlawful” if it has a “reasonable tendency to chill employees from exercising their rights.” This assessment will be made “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.” At this stage of the analysis, the Board will not consider the employer’s reasons for maintaining the rule or any reasonable alternative interpretations of the rule. If the employer’s workplace rule is found to be presumptively unlawful, the employer will be found guilty of violating the NLRA unless it can prove that the rule: (1) advances a legitimate and substantial business interest; and (2) the employer is unable to advance that interest with a more narrowly tailored rule.

Board Member Marvin E. Kaplan vigorously dissented from the majority’s decision in Stericycle, predicting that employers will rarely be able to meet the Board’s new test. He criticized the Board’s use of a “hypervigilant” reasonable employee standard and argued that it is “virtually impossible to craft work rules that are general enough to serve their intended lawful purpose without being susceptible to an interpretation that infringes on Section 7 rights.”

While the Board’s decision to replace the Boeing test was all but certain, the new Stericycle test is a radical change in the law. It effectively paints a large target on the back of every employer by inviting litigation over any workplace rule that a hypothetical “economically dependent employee contemplating engaging in protected concerted activity” could potentially view as limiting or chilling employees’ rights.

Because the rights under Section 7 of the NLRA are defined in broad, vague terms that are subject to ongoing examination and refinement, the NLRB is likely to invalidate workplace rules for potential interference with activities that no employer could have known about or predicted when a challenged rule was created. In addition, given the many different ways workplace rules are written, the case-by-case approach adopted in Stericycle will make it extremely difficult for employers to predict how the NLRB will construe their particular workplace rules even after the Board has issued decisions applying the new Stericycle test to similar rules based on substantially the same business reasons.

The new Stericycle test is also likely to be used by unions as an additional weapon in organizing campaigns as the maintenance and use of overly broad workplace rules can be used as evidence of discriminatory animus and serve as the basis for overturning or rerunning a union representation election.

Thus, employers who have not had their workplace rules and handbooks reviewed recently should do so now in consultation with their labor and employment counsel, as well as develop a process for ongoing review of such documents as the Board issues decisions using the new Stericycle test.

KZA attorneys have advised employers for decades on the Board’s ever-changing tests and standards. If you need assistance updating your workplace rules and employee handbooks, or you have a pending charge with the NLRB, we can help. 

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.