Executive Summary: On Wednesday, August 2, 2023, the National Labor Relations Board (“NLRB” or the “Board”) issued its long-awaited decision in Stericycle, Inc., 372 NLRB No. 113 (2023) wherein it adopted a new legal framework for assessing whether workplace rules violate the National Labor Relations Act (“NLRA”). While this standard purports to offer employers relief, it amounts to individualized, fact intensive analysis, and whether it provides meaningful guidance to employers, as it is applied going forward, remains to be seen. The decision illustrates that the Board will reject broad workplace rules for “legitimate business purposes” and will now require employers to demonstrate such rules advance “(1) legitimate and (2) substantial” interests. “Legitimate” is no longer enough; the rule is only valid if the employer cannot advance its legitimate and substantial interest with a more narrowly tailored rule. Now, more than ever, the devil is in the details. Employers must carefully draft workplace policies to avoid violating the NLRA.
In January 2022, the Board invited the public to comment on whether it should overrule its 2017 decision in Boeing Co., 365 NLRB No. 154 (2017) – allowing employers to rebut allegations that workplace rules infringed on employee rights under the NLRA – but which focused on the negative impact of an employees’ potential exercise of Section 7 activity and the rule’s connection to the employers’ right to maintain discipline and productivity. To that end, the Board heard Stericycle, which involved the legality of a medical waste disposal company’s workplace confidentiality rule and its prohibition on workplace recordings and discussions with colleagues regarding workplace conditions. The Board held the rule violated the NLRA because the policy had a “reasonable tendency” to dissuade employees from protected concerted activity when viewed from an employee’s perspective.
In doing so, the Board abandoned the test outlined under its 2017 decision in Boeing and, in its place, implemented a new standard that builds on and modifies the standard previously applied under Lutheran Heritage Village Livonia. For all intents and purposes, Stericycle, marks the return to Lutheran Heritage’s narrower standard in substance, if not in form. When analyzing workplace rules under Stericycle, the General Counsel must prove the rule at issue has a reasonable tendency to chill protected concerted activity when considered from the perspective of an “economically dependent” employee. Suppose the General Counsel meets its burden and establishes the rule is presumptively unlawful. In that case, the employer may rebut the presumption by proving the rule establishes a legitimate and substantial business interest and that it “is unable to advance that interest with a more narrowly tailored rule.” Unlike under Boeing, the employer’s intent no longer has any bearing on the analysis. Indeed, the General Counsel can carry its burden even if the challenged rule can be reasonably construed as non-coercive.
So where does this leave employers? When one considers this Board’s other holdings in analogous cases in conjunction with the Board’s holdings during the Obama administration, a through line emerges — one that eschews the clarity offered by objective tests and favors subjective standards. Generally speaking, Stericycle reverts back to a subjective standard prone to pedantic hair-splitting, unpredictable outcomes, and Board holdings so narrow that they are more prone to being distinguished than serving as useful guideposts for thoughtful compliance.
Like its holding in Tesla, Inc., 371 NLRB No. 131 (2022) that workplace uniform rules limiting employees’ ability to wear union apparel or insignia are unlawful absent a showing of nebulous “special circumstances,” Stericycle requires employers to prove its interest cannot be accomplished with a more narrowly tailored rule. Since Stericycle also holds any ambiguity in a rule must be construed against the employer, it would appear an employer seeking to prove its “legitimate and substantial business interest” affirmative defense has a tall task before it. The rule has become the exception; the exception has become the rule.
The Bottom Line
The Board’s holding in Stericycle rejects its past efforts to provide a measure of clarity and predictability for employers seeking to draft lawful workplace policies. It replaces clear-cut standards with subjective tests that offer employee rights under the NLRA a position of primacy when juxtaposed against competing rights and interests.
Following Lutheran Heritage, the General Counsel’s office aggressively prosecuted charges attacking workplace policies and employee handbooks until Boeing compelled a more balanced approach to enforcement. Armed with the Board’s holding in Stericycle, you can safely assume the Board’s General Counsel will once again apply an aggressive prosecutorial posture. Employers should act now to ensure their policies will pass muster.
Without question, following Stericycle employers must meticulously draft and update policies with an eye toward unambiguous clarity of purpose and intent. Employers would be well-served to contextualize rules, carefully delineate their scope of application, describe the “why” underlying the rule’s mandate, and provide examples to preclude the implication of unlawful application. Employers seeking the most conservative approach to compliance should ensure their policies disclaim any intention to infringe on employee rights and, consider all factors in the context of enforcement. Remember though, the Board generally dismisses “generic” savings clauses, as reflected in the holding in Macy's Inc., 365 NLRB No. 116 (2017). Simply adding one to a policy or employee handbook will not make a broadly worded policy that could inhibit employees from exercising their rights under the NLRA lawful.
If you have any questions regarding this Alert, please contact the authors, Corey Franklin, Partner in our St. Louis office at cfranklin@fordharrison.com, and Robert Baker, Associate in our Atlanta office at rbaker@fordharrison.com. Of course, you can also contact the FordHarrison attorney with whom you usually work.