This month, the National Labor Relations Board (“NLRB”) issued a decision that will significantly affect many private employers nationwide, both unionized and nonunionized, impacting their ability to implement and enforce workplace rules and policies. The decision, Stericycle, Inc., (“Stericycle”) ostensibly aims to protect workers’ rights under Sections 7 and 8(a) of the National Labor Relations Act (“NLRA”) by prohibiting the adoption of any “overbroad” work rules, policies or procedures that could be considered to have a chilling effect on employees’ exercise of rights under these provisions.

Through the issuance of this decision, the NLRB increases scrutiny of workplace rules using a new standard, which deems a rule or policy “presumptively unlawful” if it could reasonably be interpreted to chill employees from engaging in Section 7 activity. As described below, it is a low burden.

Section 7 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,” or “to refrain from any or all such activities.” Section 8(a)(1) of the NLRA deems it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the Act.

Prior Standards

Before the August 2, 2023 ruling, the NLRB employed a standard set forth in a 2017 decision, Boeing Co., (“Boeing”) to assess the lawfulness of employers’ rules and policies through a balancing test. That test considered the potential impact on both the employee’s Section 7 rights and the employer’s legitimate justifications associated with the rule or policy at issue. The Boeing decision established that some types of rules would be considered categorically lawful to maintain, because any potential adverse impact on rights protected under the NLRA would be outweighed by an employer’s justification for the rule. Examples of such categorically lawful rules included the imposition of basic civility standards; rules prohibiting outside employment; and rules requiring employees to maintain confidentiality of workplace investigations. Subsequent decisions affirmed Boeing and clarified the balancing test to be employed.

The New Standard

The Stericycle decision, however, overruled the Boeing framework, and a number of subsequent decisions, including decisions that provided for categorically lawful rules. Stericycle replaces those standards with a two-step analysis to be employed with every rule, even those previously deemed categorically lawful.

First, when challenging a rule, the NLRB must make an initial showing of proving that an employee could “interpret the rule to have a coercive meaning,” which could have a chilling effect on protected activity. The NLRB will review a number of factors including “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.” Significantly, this analysis is made from the “perspective of the economically dependent employee who contemplates engaging in” protected activity. Rules are “presumptively unlawful” if they have a “reasonable tendency” to chill the exercise of Section 7 rights. This is a low burden to carry, but it is a rebuttable presumption. An employer may then rebut the presumption of unlawfulness by showing the rule at issue both (1) advances legitimate and substantial business interests, and (2) could not be replaced by a more narrowly tailored rule. The NLRB expressed that, by “requiring employers to narrowly tailor their rules to serve those interests, the Board will better support the policies of the National Labor Relations Act[.]”

Implications and Practical Considerations

The Stericycle Board recognized that many rules will be implicated in a variety of contexts. The decision makes it more likely that even common workplace rules could be challenged and found unlawful. Accordingly, employers must promulgate and maintain rules that are narrowly tailored to “advance legitimate and substantial business interests,” and that minimize the risks of interfering with workers’ Section 7 rights.

The NLRB indicated that this new standard is to be applied retroactively and that it applies to both union and non-union workplaces. The decision even applies to rules that do not expressly restrict concerted activity.

Not only is the decision a major shift in the legal standard for evaluating the lawfulness of work rules, it is also vague and could be applied unpredictably given the lack of guidance in the decision. In evaluating work rules, the NLRB will now conduct a “particularized analysis of specific rules, their language, and the employer interests actually invoked to justify them.” Because the new test is broad and employee friendly, employers must promptly review their current rules and policies contained within handbooks, manuals, and the like to ensure compliance with the NLRA. In doing so, employers should seek legal assistance to determine whether revisions need to be made.

Examples of rules or policies that could be implicated by the decision include those relating to:

1. Personal conduct;
2. Conflicts of interest;
3. Confidentiality of harassment complaints or investigations;
4. Use of social media;
5. Restrictions on criticism/disparagement of the employer;
6. Civility codes or prohibitions on insubordination;
7. Restrictions on use of cameras, recording devices, or cellphones in the workplace;
8. Procedures to address safety complaints;
9. Restrictions on outside employment;
10. Restrictions on use of company communication systems (e., email, Slack, Teams);
11. Restrictions on meetings or use of petitions; and
12. Restrictions on comments to media or government agencies.

This is not an exhaustive list. Of course, context and other factors will play a significant role in determining whether a given workplace rule could be affected by the Board’s decision in Stericycle, and the full impact of the decision remains to be seen. Though it will likely be appealed, an appellate process could take many months or even years, and appellate decisions may not be binding in all jurisdictions. In the meantime, the NLRB will be enforcing this new standard.

Employers are well advised to proactively scrutinize their rules and policies and consider amending or drafting new rules to ensure compliance with the decision. Hinckley Allen’s Labor and Employment team has the expertise to review rules and handbooks that may be implicated, advise employers accordingly, and help them comply with the new standard while protecting their interests.