NLRB to Employers: Work Rules Must Be “Narrowly Tailored” to Avoid Interference with Protected Activity

On August 2, 2023, the National Labor Relations Board (NLRB) issued a much-anticipated decision addressing the lawfulness of employer work rules that could be read as prohibiting or interfering with employees’ rights to work together to advance their interests in the workplace – rights that are protected by Section 7 of the National Labor Relations Act.

This decision, which was issued in a case involving the medical-waste disposal company, Stericycle, Inc., overrules the Trump-appointed Board’s controversial Boeing Co. decision, issued in 2017. The Boeing decision was widely criticized both for the manner in which it was made—announcing a new rule without notice to the public and without seeking input from interested parties—and also for establishing blanket, subject-based categories of “always lawful” rules that incentivized employers to craft overbroad policies with little or no consideration for their effect on worker rights.

A salient example the Board noted arose from the Boeing decision itself, in which the Board considered a rule prohibiting cameras in the workplace that it found was justified by Boeing’s interest as “one of the country’s most prominent defense contractors” in safeguarding classified and export-controlled technology information. Based on that highly specific justification, the Board then found that such no-camera rules were always lawful to maintain in all workplaces, whether they had similar security interests or not. The current Board determined that this categorical approach was “arbitrary and capricious,” and eliminated it under the new standard.

Prior to the Boeing decision, the Board had applied a case-by-case approach that examined whether a “reasonable employee” would read a rule as restricting or prohibiting them from exercising their rights under Section 7. This approach had been established 13 years earlier by a Republican-majority Board appointed by George W. Bush. The standard adopted by the current Board builds upon that pre-Boeing framework.

Going forward, the Board will begin its analysis by assessing whether the challenged work rule has a “reasonable tendency to chill employees from exercising their Section 7 rights.” In doing so, the Board will interpret the rule from the perspective of the “reasonable employee who is economically dependent on her employer” and who “contemplates engaging in Section 7 activity.” As the Board explained:

Such an employee is readily inclined to avoid violating a rule, and so readily inclined to interpret it more broadly to restrict or prohibit Section 7 activity than a disinterested observer might. Being discharged might mean—to take just two very real examples—being unable to pay rent or put food on the table. For purposes of the Act, then, the coercive potential of a work rule is inextricably intertwined with the vulnerable position of employees.

The Board’s approach to the “reasonable employee” standard acknowledges the economic precarity faced by many working Americans, and the ways in which employers take advantage of that insecurity—wittingly or otherwise. If a rule would reasonably tend to chill protected workplace activity, it may still be lawful to maintain if the employer can show a “legitimate and substantial business interest” that the employer is “unable to advance . . . with a more narrowly tailored rule.”

The Board observed that placing the burden on the employer to proactively eliminate ambiguity by narrowly tailoring its rules is consistent with employees’ long-established right to keep their protected activities confidential. This right would be thwarted if employees had to seek clarification from their employer about the operation of an ambiguous rule and thereby signal that they were contemplating protected activity.

The Board’s decision is retroactive to all pending cases alleging an unlawfully maintained work rule.

Should you have any questions about the Stericyle case and its application in your workplace, please do not hesitate to contact the experienced labor lawyers at Willig, Williams & Davidson.