On August 2, 2023, the National Labor Relations Board (Board/NLRB) issued a 3 to 1 decision adopting a new standard for determining when an employer’s work rules are unlawful to the National Labor Relations Act (the “Act”). In essence, the NLRB’s newly announced rule is a return to the prior Obama Board’s scrutiny of employer handbooks and work rules. The purpose of this return to prior decisions is to allow the Board to take an expansive review of employer work rules. The decision takes aim at work rules that broadly may restrict an employee’s protected concerted rights, for example discussing or expressing concern about working conditions. See Stericycle, Inc., 372 N.L.R.B. No. 113 (Aug. 2, 2023). Such workplace rules may include policies relating to conflicts of interest, confidentiality, or personal conduct.
The Board’s decision is purportedly aimed at requiring employers to narrow allegedly overly broad work rules such that they only promote legitimate and substantial business interests while avoiding burdening employee rights—from the hypothetical, reasonable employee’s perspective. The Board’s “new” framework returns to an earlier adopted case-specific approach to analyzing facial challenges to work rules, rejecting prior Board’s decisions that applied a categorical classification system to work rules.
Specifically, under its new burden-shifting analysis, an employer’s work rules are presumptively unlawful if they have a reasonable tendency to chill employees from exercising their Section 7 rights, i.e., interfering with or restraining protected concerted activity. The Board’s new analysis begins with viewing a work rule through the lens of a hypothetical, reasonable “economically dependent employee.” According to the Board, such an employee is readily inclined to avoid violating a rule, and so is readily inclined to interpret such rules broadly so as to restrict or prohibit protected employee rights. Thus, if at a hearing the Board’s lawyer demonstrates such a hypothetical employee could interpret a work rule as coercive or as prohibiting protected activity, then the work rule is presumptively invalid. However, the rule will be found lawful, if an employer can demonstrate that the work rule advances legitimate, substantial business interests that cannot be achieved by a more narrowly tailored rule.
Crucially, the Board’s decision applies retroactively and to both union and non-union employers. Therefore, all employers are encouraged to revisit their handbooks and work rules in light of the new rule and ensure that proper disclaimers are included to clarify that their policies are not intended to interfere with employees’ protected rights.