
Any business that has not heard of Stericycle should know of the decision and understand its impact on business rules, policies, and handbooks.
What is Stericycle and why should a business care?
On August 2, 2023, in Stericycle, Inc. and Teamster Local 628, 372 NLRB No. 113, the National Labor Relations Board (NLRB) adopted a new legal standard for evaluating employer work rules. The NLRB is required to balance the nature and extent of a rule’s potential impact on Section 7 rights against legitimate business justifications for the rule.
It does not matter if your employees are unionized because Section 7 protects all employees.
What is Section 7?
Section 7 of the National Labor Relations Act (NLRA) guarantees employees several important rights related to labor organization and collective bargaining.
Previous Standard:
The previous standard, established in The Boeing Co., 365 NLRB 154 (2017) and refined in LA Specialty Produce Co., 368 NLRB 93 (2019), evaluated workplace rules from the perspective of an “objectively reasonable employee who is aware of his legal rights but who also interprets work rules as they apply to the everydayness of his job.” The standard treated workplace rules as either categorically lawful, sometimes lawful, or never lawful. The NLRB determined that this standard allowed employers to enact overly broad work rules that discouraged employees from exercising their rights under Section 7 of the Act.
The New Standard:
The Stericycle decision overrules Boeing and LA Specialty Produce. The NLRB rejected Boeing’s categorical approach to work rules. Instead, it emphasizes case-specific consideration of work rules. This case-by-case analysis requires the NLRB to examine (i) the specific wording of the rule, (ii) the specific industry and workplace context in which the rule is maintained, (iii) the specific employer interests it may advance, and (iv) the specific statutory rights it may infringe. Employers must now narrowly tailor rules to serve their legitimate interests while minimizing the impact on employee rights.
Under step one of the new standard, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If an employee “could” (not “would”) reasonably interpret a rule to restrict or prohibit Section 7 activity, the rule is presumptively unlawful. The Board may find a rule invalid even if the rule could just as easily be interpreted as not infringing on worker rights, and even if the employer had no intention of impacting worker rights. The NLRB will evaluate the work rule’s impact based on the perspective of someone “economically dependent” on the employer and not using the prior “reasonable person” standard. Then, under step two of the new standard, the employer can rebut the presumption by demonstrating that the rule advances a legitimate and substantial business interest and that a more narrowly tailored rule is not feasible.
The Impact:
Should the NLRB find a workplace rule unlawful, the employer must timely remove the unlawful language and post and distribute notices to employees acknowledging the violation and providing information about their rights under the NLRA.
Employee Handbook Revisions: Employers need to review and potentially revise their employee handbooks. Rules that could be interpreted as coercive or restrictive should be narrowed down to advance a “legitimate and substantial business interest” while minimizing impact on employee rights.
Industry Impact: Across industries, employers must strike a balance between business needs and employee rights. Sectors with strong union presence or historically contentious labor relations may face more scrutiny.
What Employers Can Do In Light of the New Rules:
Review Existing Rules:
Narrowly Tailor Rules:
Training and Communication:
Document the Rationale:
Add a Disclaimer:
Review Pending Unfair Labor Charges:
Consult Legal Counsel:
So many questions remain. What rules are allowed? What happens if a rule cannot be narrowed? Will a disclaimer help? Stericycle raises so many questions and provides so few answers.
What Were the Policies Involved?
A Personal Conduct rule that stated “[c]onduct that maliciously harms or intends to harm the business reputation of Stericycle will not be tolerated. You are expected to conduct yourself and behave in a manner conducive to efficient operations. Failure to conduct yourself in an appropriate manner can lead to corrective action up to and including termination . . . Engaging in behavior that is harmful to Stericycle’s reputation.”
A Conflict of Interest rule that stated that “Stericycle will not retain a team member who directly or indirectly engages in the following: . . . An activity that constitutes a conflict of interest or adversely reflects upon the integrity of the Company or its management.”
A Retaliation rule that stated that “[a]ll parties involved in the investigation will keep complaints and the terms of their resolution confidential to the fullest extent practicable.”
Do you have policies like the ones struck down in Stericycle? Do you need a review of your workplace rules? Do you have other questions? Please contact Mitchell Goldstein (mgoldstein@setlifflaw.com) at (804) 377-1269, or Steve Setliff (ssetliff@setlifflaw.com) at (804) 377-1261.
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