Major Change to Employee Handbook Requirements

On December 14, 2017, the National Labor Relations Board overturned a controversial 13-year precedent and issued a major decision relating to the legality and enforceability of certain employee handbook rules for employers nationwide.

This decision is likely to have far-reaching impact on the employer – employee relationship. With this NLRB action, a major constraint on employers' ability to promulgate work rules has been significantly rolled back.

In 2004, the NLRB created a test for deciding whether portions of employee handbooks were legal. In Lutheran Heritage Village-Livonia 343 NLRB 646 (2004), the NLRB held that if "employees would reasonably construe" that the language in a work rule restricted the employees from banding together for a collective purpose, then the handbook provision would not be enforceable. This "concerted activity" shield was true for both unionized and non-unionized workplaces.

The "Lutheran Heritage test" was used by the NLRB to strike down many employee handbook provisions over the past several years. Those provisions included rules which prohibited employees from criticizing their employers on social media and rules which prohibited making recordings in the workplace. Shockingly, Lutheran Heritage was even used in a 2016 case to strike down aspirational handbook language which called upon employees to "maintain a positive work environment."

During that same period, a minority of NLRB members often issued stinging dissents related to these contentious decisions, citing too great of an emphasis on employees' rights and too little attention to the legitimate needs of employers to manage their workplaces.

On December 14, a 3-2 majority of the NLRB overturned the Lutheran Heritage standard. The vote in The Boeing Company and Society of Professional Engineering Employees in Aerospace, IFPTS Local 2001 was strictly along party lines. The Republican majority found the prior Lutheran Heritage test to be both complicated and onerous on employers.

Now, the NLRB standard for reviewing a challenged employee handbook provision will not be based on the "reasonably construed" language of Lutheran Heritage. Rather, the board will consider the "nature and extent" of the rule's "potential impact" which may be adverse to employees' rights under the National Labor Relations Act. Further, the NLRB will consider the "legitimate justifications associated" with the work rule. In other words, the legitimate need of the employer may now take precedence over employees' right to act in a concerted manner, depending on the language of the work rule, the legitimacy of the employer's need and the operative facts.

As a good end-of-year practice, and particularly in light of this major NLRB ruling, every employer should undertake the process of reviewing employee handbooks to determine what changes should be made going forward.

For any questions regarding the applicability of the new standard, please contact Max Rieker at 216-928-2972 or mrieker@walterhav.com.