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Employers brace for fallout from NLRB decision

A reversal of course by the National Labor Relations Board has management-side lawyers and their clients scrambling to reassess work rules for whether they may now be deemed unlawfully to chill employee rights to engage in concerted activity.

A divided NLRB issued its highly anticipated decision in Stericycle Inc. last month. The decision announced a new standard on the question of whether an employer’s work rule that does not expressly restrict employees’ protected concerted activity under Section 7 of the National Labor Relations Act is nevertheless unlawful under NLRA Section 8(a)(1).

“[O]ur standard requires the General Counsel to prove that a challenged rule has a reasonable tendency to chill employees from exercising their Section 7 rights,” the Stericycle majority opinion states. “We clarify that the Board will interpret the rule from the perspective of an employee who is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity.”

Springfield, Massachusetts, labor lawyer Amy B. Royal says employers have their work cut out for them.

“Employers are going to have to look at any policies, handbooks and work rules that they have and ensure that they are narrowly tailored,” Royal says. “The ultimate burden on the employer is to demonstrate not just that they have a legitimate and substantial need for a particular work rule or policy, but that there’s no other way to accomplish this other than the way it is written. This is a huge departure [from recent NLRB decisions].”

Providence employment litigator Shelagh Michaud sees the case as part of a larger trend of decisions and new laws leaning in favor of employee rights.

“In addition to rights to unionize and collectively bargain, there are also new rules, laws and guidance on noncompetes that lean toward allowing employees to have more portability and freedom once they leave an employer,” she says. “All of these changes are going to affect not just the way we structure [workplace] policies, but also employment agreements, separation agreements, and how we handle our expectations for key employees.”

An administrative law judge in Stericycle had found that the respondent employer violated Section 8(a)(1) by maintaining certain work rules addressing personal conduct, conflicts of interest, and the confidentiality of harassment complaints.

Section 7 of the NLRA 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,” as well as the right “to refrain from any or all such activities.”

In reaching a decision in Stericycle, the ALJ followed the analysis in the NLRB’s 2017 ruling in Boeing Co., as interpreted by the board’s 2019 decision in LA Specialty Produce Co.

In those and subsequent cases, the board applied a standard recognizing that certain categories of work rules — such as rules of civility — are “lawful” when: (1) reasonably interpreted, they do not prohibit or interfere with the exercise of NLRA rights; or (2) the potential adverse impact on protected rights is outweighed by justifications for the rule.

But the board in Stericycle replaced the categorical approach of Boeing with a new standard focusing on how employees would interpret a particular work rule. In setting a new standard, the majority made clear that an employer’s intent in maintaining a rule is “immaterial.”

“Rather, if an employee could reasonably interpret the rule to have a coercive meaning, the [NLRB’s] General Counsel will carry her burden, even if a contrary, noncoercive interpretation of the rule is also reasonable,” the majority wrote. “If the General Counsel carries her burden, the rule is presumptively unlawful, but the employer may rebut that presumption by proving that the rule advances a legitimate and substantial business interest, and that the employer is unable to advance that interest with a more narrowly tailored rule.”

The board remanded the matter for the ALJ to apply the new standard in rendering a decision.