NLRB Imposes Strict New Limits On Employer Work-Rules

• Published date: 11 August 2023
• Subject Matter: Employment and HR, Employee Rights/ Labour Relations
• Law Firm: K&L Gates
• Author: Mr Michael Pavlick and Taylor Arluck

INTRODUCTION

On 2 August 2023, a divided National Labor Relations Board (NLRB or Board) held in Stericycle¹ that employers violate the National Labor Relations Act (NLRA or Act) when they issue facially neutral work-rules,² such as a no-camera policy in the workplace, that a "reasonable employee," viewed through the lens of economic dependence on their employer, could believe infringes on their Section 7 rights.

The NLRB's decision in Stericycle, which was split along partisan lines, overturned a Trump-era precedent³ that divided employer work-rules into three categories'universally legal, conditionally legal, and uniformly illegal under the NLRA'that were relatively straightforward for employers to understand and the Board, by its own admission, to adjudicate. Stericycle marks a return to the Obama-era Board approach that resulted in frequent challenges to employee policies.

As addressed in greater detail below, Stericycle affects unionized and non-unionized employers, who will likely face greater NLRB scrutiny over their implementation of previously uncontroversial work-rules'regardless of an employer's intent behind issuing a work-rule.

FACIALLY NEUTRAL WORK-RULES MUST BE 'NARROWLY TAILORED' TO SERVE EMPLOYERS' LEGITIMATE AND SUBSTANTIAL BUSINESS INTERESTS AND BALANCED AGAINST EMPLOYEES' SECTION 7 RIGHTS

In Boeing, the Trump-era Board created the above-referenced three-category system for adjudicating whether employer work-rules violated Section 8(a)(1): universally legal, conditionally legal, and uniformly illegal. For facially neutral work-rules that may be conditionally legal, the Board applied a balancing test that weighed an employer's legitimate business interests linked to the work-rule at issue, such as maintaining workplace discipline, against an employee's interest in exercising their Section 7 rights, which include the rights to organize unions, collectively bargain with their employer, and engage in protected concerted activity.

Boeing and its progeny⁴ could be viewed as a rejection of the "reasonable employee" test previously advanced by the Obama-era Board, which found a challenged work-rule unlawful "merely because it could be interpreted, under some hypothetical scenario, as potentially limiting some type of Section 7 activity."⁵

The Stericycle Board abandoned Boeing's interpretation of the "reasonable employee" test, claiming its "primary problem" was that it permitted employers to adopt overbroad work-rules that chilled employee rights because it...