A Significant Change to Employee Handbook Rules: Understanding the New NLRB Standard

Wednesday September 27, 2023 Published in Corporate and Business
NLRB Rules changing - owners need to review employee handbooks to comply

By HR attorney Lorraine M. Catalusci
Wegman Hessler Valore

In the continually evolving landscape of labor laws, staying abreast of the latest legislative changes is key to maintaining legal compliance and safeguarding your business. On August 2, 2023, a pivotal change was ushered in by the National Labor Relations Board (NLRB), altering the standard regarding employer policies related to employees. This change, marked by the Stericycle case, presents a significant shift from the previous standard that has been in place for the past six years. 

This new benchmark has implications for almost all employers, regardless of whether their employees are members of a union or not. It’s crucial to understand this new standard to ensure your policies align with the latest requirements. 

The Evolution of the NLRB Standard

In 2004, the NLRB established a policy in the Lutheran Heritage Village-Livonia case, stating that a policy would violate the National Labor Relations Act (NLRA) if an employee could reasonably interpret the rule as inhibiting them from engaging in protected activity under the NLRA, such as unionizing. This standard was later overturned in 2017 in the Boeing case. 

The Boeing test introduced a balancing act between an employer’s legitimate business justification for a work rule and its potential chilling effect on an employee’s right to organize or engage in other protected activity. However, this standard had its shortcomings. 

The Shift to the Stericycle Standard

The Stericycle case saw the NLRB critique the Boeing test for allowing employers to implement broadly defined work rules that could restrict an employee’s rights to engage in protected activity. The NLRB’s decision recognizes that the Boeing standard failed to consider an employee’s economic dependency on his/her employer. 

Given this economic dependency, an employee might not understand the scope of an overly broad work rule and, therefore, might refrain from certain activities to avoid the risk of violating the rule. The NLRB also argued that the Boeing standard implicitly condones broad work rules as it does not necessitate the employer to narrowly tailor its rules to only promote its legitimate and substantial business interests while avoiding any infringement on employee rights afforded under Section 7 of the NLRA. 

The New Standard: A Return to Lutheran Heritage

The NLRB has now adopted a modified version of the 2004 Lutheran Heritage Village-Livonia framework. This revised standard stipulates that an employer can counter the presumption that a rule is unlawful by proving it advances legitimate and substantial business interests that a more narrowly tailored rule cannot achieve. 

This new standard places the onus on the General Counsel to demonstrate that a disputed rule has a reasonable tendency to inhibit employees from exercising their Section 7 rights. The NLRB clarified that it would interpret the rule from the perspective of an employee who is economically dependent on the employer and contemplating engaging in protected activity. If the General Counsel can show that an employee could interpret the rule as coercive, the rule is presumptively unlawful. However, the employer can rebut this presumption by proving that the rule promotes a legitimate and substantial business interest that cannot be achieved with a more narrowly tailored rule. 

The Implications for Employers

So, what does this mean for employers? Schedule time to review your current policies. Consider the reason behind each policy– what legitimate business reason exists to justify it under scrutiny from the NLRB? Could the rule be more narrowly tailored? 

Staying proactive, strategic, and informed about changes in labor laws is not just a matter of compliance — it’s a matter of protecting your business and your employees. This new NLRB standard is yet another reminder of the importance of staying ahead of the curve when it comes to business law expectations and requirements.

We are here to help. Contact Angela M. Lavin, at (216) 642-3342 or amlavin@wegmanlaw.com

Wegman Hessler Valore specializes in business law for business leaders, applying legal discipline to solve business problems to help leaders run smarter. For over 50 years, this Cleveland law firm has provided full-service strategic legal counsel for closely held businesses, corporations, and individuals. Practice areas include: business law; litigation; corporate governance; estate planning and wealth protection; intellectual property; family law for business owners; HR and employee matters; commercial real estate; business acquisition, and more. Get in touch to learn more.

Visit wegmanlaw.com or call us at (216) 642-3342.

Copyright © Wegman Hessler Valore. This information is for educational purposes. It does not reflect an attorney-client relationship with the author(s) or the firm. This information should not be used as a substitute for professional legal advice in specific situations.

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