The New Standard on Employer Rules and Policies

Last month, the NLRB issued a ruling in the Stericycle case adopting a new legal standard regarding policies surrounding an employee’s right to organize. Under Section 7 of the National Labor Relations Act,  workers have the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively . . . and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” including the right to discuss pay and benefits.  The Stericycle decision provides a new framework for determining whether an employer has unlawfully restricted these Section 7 rights through its rules or policies (referred to collectively hereafter as “rules”), and applies to all employers regardless of whether their employees are represented by a union.

Under the new legal standard, if there is a challenge to an employer policy or rule alleging that employee rights under Section 7 have been violated, the General Counsel of the NLRB must show that the rule has a reasonable tendency to chill employees from exercising their Section 7 rights. If that standard is met, then the rule is deemed presumptively unlawful unless the employer is able to show that the challenged rule both advances a legitimate and substantial business interest and that the rule could not be replaced with a more narrowly tailored one. If successful, the rule will instead be found lawful.

One Letter Makes a Big Difference

To meet the “reasonable tendency to chill” standard, the NLRB decided that the  General Counsel is required to prove that an employee “could reasonably interpret the rule to have a coercive meaning” that chills the ability of workers to engage in their Section 7 protected rights. This marks a difference from the previous standard, which considered whether  an employee “would” interpret the rule in this manner, and works to relax the burden to which a rule may be challenged.

In analyzing whether this burden is met, the NLRB considered the following factors: “the specific wording of the rule, the specific industry, and workplace context in which it is maintained, the specific employer interests it may advance, and the specific statutory rights it may infringe.”

“Reasonable” vs. “Economically Dependent”

The NLRB noted that these factors will be viewed from the perspective of an economically dependent, non-lawyer employee, rendering the intent of the employer being immaterial to the analysis. The NLRB then went a step further to state that, even if there is a “contrary, noncoercive” reasonable interpretation of the rule, the rule could still nonetheless be presumptively unlawful under the new standard and ambiguous rules will be construed against the employer. This perspective also marks a change that serves to relax the burden on the employee – under the previous standard, relevant factors were considered from the perspective of a “reasonable” employee.

Employer Recourse

If the rule is determined to be unlawful by the Board, an employer can rebut the presumption of unlawfulness by showing both that the rule advances a legitimate and substantial business interest and that the rule could not be replaced with a more narrowly tailored one. If those two conditions are shown, then the employer’s rule will be upheld. However, the NLRB did not give guidance on how exactly employers can prove that their rules advance a legitimate and substantial business interest, and we anticipate that future challenges and/or case law will help provide guidance on the level of proof required by employers to satisfy this standard.

As a result of the changes to the legal standard under the Stericycle decision, the General Counsel now has a much lower burden to invalidate a challenged work rule or policy.

Next Steps for Employers

As a result of the decision, all employers should consider revisiting their employee handbooks and policies for compliance with Stericycle. In particular, employers should:

  • Review policies and rules from the perspective of an “economically dependent” employee, and decide whether any of them could reasonably be interpreted to chill or prohibit a Section 7 protected right, even if they have not actually been interpreted in this way before.
  • If any rules or policies raise any red flags or potential ambiguity, revise the language to be more clear and straightforward to prevent any unintended or problematic interpretations (e.g., explicitly state that “in no event, shall this rule be enforced or construed in such a way as to prohibit or chill employees’ rights to exercise their Section 7 protected rights”).
  • Employers may want to consider creating written evidence illustrating how the rule serves an important and substantial business interest, as well as how the rule is narrowly tailored to serve that purpose.
  • When drafting new rules or policies, employers should consider this new language in light of the considerations above, as well as any future opinions or decisions clarifying the scope of this standard.

All of our employment and labor attorneys are available to answer your questions about compliance with Stericycle and any other employment and labor questions you may have.

September 22, 2023