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NLRB Changes Standard for Assessing Neutral Work Policies

16 Aug

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Update Applicable to:

All employers

What happened?

The National Labor Relations Board (NLRB) has modified its standard for evaluating neutral work rules’ compliance with the National Labor Relations Act (NLRA).

What are the details?

History of NLRB’s Standard for Neutral Work Rules:

The NLRB’s 2004 decision in Lutheran Heritage Village-Livonia previously held that facially neutral work rules violated the NLRA if employees could reasonably interpret them as restricting NLRA-protected rights. The 2017 Boeing Co. decision overturned this standard and introduced a new approach based on the potential impact on NLRA rights and the rule’s legitimate justifications. Boeing established “categories” of work rules, but this classification was changed by the 2019 LA Specialty Produce Co. decision, which created sub-categories of lawful rules.

The Stericycle Standard:

In a 3-1 decision, the NLRB introduced a new standard for analyzing facially neutral work rules. The burden-shifting framework requires the General Counsel (GC) to demonstrate that an employee could reasonably interpret the rule coercively, making it “presumptively unlawful.” The Board will no longer categorize certain work rules as “always lawful,” opting for a case-by-case analysis.

Abolishment of Categories and Introduction of New Standard:

The recent decision by the NLRB eliminates three categories of policies introduced in Boeing. These categories included rules deemed presumptively lawful, those evaluated on a case-by-case basis for potential interference with NLRA rights, and those deemed presumptively unlawful. Instead, a new subjective standard is established to assess workplace rules, focusing on whether a rule has a reasonable tendency to interfere with employees’ exercise of Section 7 rights.

Burden of Proof and Employer Justification:

Under the new standard, if an employee could interpret a rule as coercive, even if a noncoercive interpretation is also reasonable, the burden shifts to the employer to justify the rule. Employers may only rebut this presumption by proving that the rule advances a legitimate and substantial business interest, and that no more tailored version can serve the same purpose. Overbroad rules that could be narrowed to preserve employees’ statutory rights will be considered as such, and ambiguous rules will be construed against the employer.

Case-by-Case Approach:

Unlike the prior Boeing standard, the new test adopts a case-by-case approach for evaluating workplace rules. As a result, employers should anticipate new cases in the coming months to provide clarity on how this standard will be applied in practice.

Retroactive Application:

The new standard applies retroactively, meaning all employers should review their policies to ensure compliance. While it may not invalidate entire handbooks, certain provisions may now be deemed unlawful. This could expose employers to potential unfair labor practice charges on a retroactive basis, along with potential back pay and other damages.

Reviewing Disclaimers:

Many employers add disclaimers to their handbooks to clarify that policies do not interfere with employees’ Section 7 rights. However, this may not be sufficient to avoid violating the new standard, especially concerning policies considered coercive or overly broad.

Implications and Future Decisions:

This change eliminates the certainty that specific categories of work rules would be considered lawful. Employers must now evaluate their neutral work rules, anticipating how an employee-friendly NLRB may interpret them in relation to NLRA-protected activities. Most rules may be seen as restrictive by the Board, requiring employers to articulate the legitimate business interest served by the rule. Many previously accepted rules, such as civility rules, no-recording rules, and investigative confidentiality rules, may now be considered unlawful under the new standard.

For more information, please see the links below:

NLRB Release

NLRB Case

Law firm articles: Link 1, Link 2, Link 3, Link 4

What do employers need to do?

The Fisher Phillips law firm encourages employers to continue working with their internal HR teams and legal counsel to stay up to speed on the latest developments in this rapidly evolving regulatory environment. It remains to be seen whether this decision will be appealed and – if so – whether it will survive the scrutiny of the reviewing court. In the meantime, however, employers can expect every regional office within the agency to apply the new standard as written. Employers should therefore consider working with their employment attorney to audit their employment policies for compliance with the new standard and ensure they are up to speed on its real-world impact on existing workplace conduct rules. Handbook builder vendors should be commencing reviews of policies over the next month to determine if any revisions need to be made to any policy(ies). If so, employers should see notifications of updates to any affected policies that the employers should apply in order to update their handbook and remain in compliance.

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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