The NLRB, revisiting a case concerning Stericycle, Inc.'s employee handbook rules, adopted a new legal standard for evaluating facially neutral work rules under Section 8(a)(1) of the National Labor Relations Act. The NLRB found that the prior standard, established in Boeing Co., 365 NLRB No. 154 (2017), was flawed because it permitted overbroad rules that could chill employees' Section 7 rights. The NLRB now returns to a modified version of the Lutheran Heritage Village -Livonia, 343 NLRB 646 (2004), standard, clarifying that an employer can rebut the presumption that a rule is unlawful by proving it advances a legitimate and substantial business interest that cannot be achieved through a more narrowly tailored rule.

The new standard requires the General Counsel to prove that a challenged rule has a reasonable tendency to chill employees from exercising their Section 7 rights, interpreting the rule from the perspective of an economically dependent employee who contemplates engaging in protected concerted activity. If the General Counsel meets this burden, the rule is presumptively unlawful. The employer can then rebut this presumption by proving that the rule advances a legitimate and substantial business interest and that the employer cannot advance that interest with a more narrowly tailored rule. The NLRB explicitly overruled Boeing, LA Specialty Produce Co., 368 NLRB No. 93 (2019), and related cases, rejecting a categorical approach to work rules in favor of a case-by-case analysis of the specific language, context, and employer interests.

In this particular case, the NLRB remanded the case to the Administrative Law Judge (ALJ) to apply the new standard to Stericycle's rules governing personal conduct, conflicts of interest, and confidentiality of harassment complaints. The ALJ had previously found these rules unlawful under the Boeing standard.

The ALJ decision found that Stericycle violated Section 8(a)(1) of the Act by maintaining rules in its 2015 employee handbook related to personal conduct, conflicts of interest, and confidentiality of harassment complaints. The ALJ determined that the Personal Conduct and Conflict of Interest policies were overbroad and could reasonably be interpreted to prohibit protected communications among employees. The ALJ found the harassment complaint confidentiality policy was excessively and unjustifiably broad, potentially infringing upon protected communications between employees after an investigation concludes. The ALJ ordered Stericycle to cease and desist from these violations and to take affirmative actions, including rescinding the handbook and bargaining with the union.

The dissenting board member argued against the new standard, stating that it gives disproportionate weight to employee rights and fails to adequately account for legitimate employer interests. The dissenting board member favored the Boeing standard, which balances employee rights and employer interests, arguing that it provides more certainty for employers.

Significant Cases Cited

• Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945): This case confirmed the NLRB's authority to regulate employer work rules to protect employees' right to organize for mutual aid without employer interference, while also acknowledging employers' right to maintain discipline.
• NLRB v. Gissel Packing Co., 395 U.S. 575 (1969): This case established that an employer's statements must be assessed considering the economic dependence of employees and their tendency to pick up intended implications.
• Lutheran Heritage Village -Livonia, 343 NLRB 646 (2004): This case established a standard for facially neutral work rules, finding them unlawful if employees would reasonably construe them to prohibit Section 7 activity or if they explicitly restrict Sec.7 activity.
• Boeing Co., 365 NLRB No. 154 (2017): This case established a new standard for evaluating facially neutral work rules, balancing the potential impact on NLRA rights against legitimate justifications associated with the rule.
• LA Specialty Produce Co., 368 NLRB No. 93 (2019): This case attempted to clarify the Boeing standard, asserting that a reasonable employee does not view every employer policy through the prism of the NLRA and clarifying the burden of proof for demonstrating a work rule’s impact on Section 7 rights.

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