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Is Your Handbook a Liability? New Standards for Workplace Rules, Policies and Procedures

As we get closer to 2024, employers should consider a review of employment practices and rules for the new year.  This is especially so given the National Labor Relations Board’s (“NLRB”) decision this year in Stericycle, Inc., 372 NLRB 113 (2023).  In Stericycle, the NLRB laid out a new legal standard for the evaluation of work rules, adopting a case-by-case review.  Stericycle overrules the categorical approach contained in The Boeing Co., 365 NLRB 154 (2017) and revises the standard in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), presenting a change to a more employee-friendly approach to the evaluation of work rules.
Under the new Stericycle standard, general counsel must show that a work “rule has a reasonable tendency to chill employees from exercising their Section 7 rights.”  Stericycle at 2.  When considering the challenged work rule, the NLRB will not take into account the employer’s intent in using the rule, rather the NLRB will examine the rules “from the perspective of an employee who is subject to the rule and economically dependent on the employer.”  Stericycle Inc. at 2.  A work rule will be deemed presumptively unlawful “if an employee could reasonably interpret the rule to have a coercive meaning . . . even if a contrary, noncoercive interpretation of the rule is also reasonable.”  Stericycle at 2 (emphasis added).  Stericycle is a significant change from considering whether a reasonable employee would interpret the rule to chill their Section 7 rights to whether an economically dependent employee could interpret the rule as such.  Stericycle makes clear that “an employer can rebut the presumption that a rule is unlawful by proving that it advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule.”  Stericycle at 2. 
The Stericycle standard will require further litigation to clarify which work rules the NLRB may take issue with.  However, employers can no longer rely on categories of presumptively valid rules or their intent behind maintaining particular work rules. Therefore, during this time, employers should review all work rules and policies to determine whether any employee could interpret the rule to infringe on their Section 7 rights.  Further, employers must consider whether there is a legitimate business reason to maintain each of their work rules, and if so, are the rules narrowly tailored to satisfy the Stericycle review.  As the new Stericycle standard applies retroactively, this review applies to existing rules and new workplace rules.  Thus, employers should review their current work rules to comply with the new standard and determine if changes should be made. 
To read the full alert download the pdf.