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The NLRB’s Next Target: Handbooks and Policies

by Jennifer Shaw and Julia Melnicoe Insel | The Daily Recorder | September 5, 2023

The National Labor Relations Board (the “NLRB”) recently issued a new decision, Stericycle, Inc., that broadly affects how most employers will think about their employment handbooks and policies. Employer should consider implementing a number of best practices to reduce their risk.

Understanding the NLRB

The NLRB is the federal agency responsible for enforcing the National Labor Relations Act (the “NLRA”), the law that protects employee rights to “engage in concerted protected activity” to improve wages and working conditions. The NLRB’s regional offices receive and investigate charges from individuals and labor unions alleging violations of the NLRA, such as an employer interfering with an employee’s right to discuss wages with coworkers or the media. If an NLRB Regional Director elects to file a complaint against the employer, and an Administrative Law Judge finds a violation of the NLRA, the employer may be ordered to make employees whole through backpay and consequential damages, offer reinstatement, and/or post notices around the workplace about the violation.

Employers commonly assume that the NLRA only applies to unionized workplaces. However, most non-supervisory employees are protected by the NLRA, even if they are not represented by a union. The NLRB may investigate and file a complaint against almost all private employers, whether or not a union is involved.

Interestingly, the NLRB is comprised of presidential appointees with staggered five-year terms. That means that the NLRB’s positions tend to shift with the politics of the current administration. The NLRB currently is moving in a pro-labor direction, and aggressively seeking to update its decisions and guidance to reflect this approach. In other words, employers must be vigilant, even if the NLRB has issued employer-friendly decisions in the recent past.

The NLRB’s Treatment of Workplace Policies

Workplace policies that infringe on employees’ NLRA rights are unlawful. For example, a policy instructing employees to keep their wage rates confidential clearly violates the NLRA. Additionally, policies that discourage employees from engaging in protected activity, such as being “insubordinate,” may lead to a violation, depending on the circumstances.

After its Boeing decision in 2017, the NLRB found even policies that discourage employees from engaging in protected activity are lawful if the employer’s legitimate business reasons for the policy outweigh the effect of the policy on employee’s NLRA (or “Section 7”) rights. The classic example is a “no recording” policy. Although employees have the right to record their working conditions, employers could maintain a “no recording” policy under the Boeing standard, to the extent the employer’s legitimate business interest (e.g., protecting client privacy) outweighed the employees’ Section 7 rights. 

However, the NLRB’s decision in Stericycle adopts a standard that mostly eliminates the employer’s reasoning from the analysis. Now, the NLRB will assess whether a “reasonable employee” could interpret a policy as discouraging them from engaging in protected activity. The NLRB explained that because a “reasonable employee” is in a disadvantaged economic position compared to the employer, they likely would interpret policies broadly to avoid discipline. Accordingly, a reasonable employee’s interpretation of a policy need not be the most obvious or practical one.

If the NLRB decides the policy could “chill” a reasonable employee’s exercise of their Section 7 rights, the policy is unlawful unless the employer demonstrates that it could not accomplish a “substantial and legitimate” business purpose through a more narrowly tailored policy. In other words, the employer must prove that it could not have written policy more clearly to avoid the employee’s misinterpretation. This standard requires employers to effectively guess at potential misinterpretations, while the NLRB will criticize workplace policies with the benefit of hindsight. Additionally, the Stericycle decision provided no examples of how an employer might effectively tailor an important policy.

Best Practices for Approaching Policies Post-Stericycle

Employers must now take a hard look at their policies and handbooks to assess how an employee might misconstrue their intent. Of course, it is difficult to draft policies that are general enough to be flexible for the circumstances, but sufficiently focused to avoid those unintended meanings. For example, many employers have rules requiring “respect” at work, but employees may misinterpret this language as prohibiting them from complaining about working conditions.

Policies especially likely to cause problems are those addressing employee behavior, such as standards of conduct, social media, off-duty conduct, conflicts of interest, public relations, customer service, and more. For example, a policy that instructs employees to “always represent the Company in a professional and positive manner” could be construed as preventing employees from engaging in concerted activity with unions, which they have the right to do. In short, employers must consider whether the language they use is overly broad, or so vague as to allow multiple interpretations.

Employers must keep in mind that the Stericycle decision also affects policies outside of handbooks and policy manuals. For example, if an employer has a policy relating to confidentiality of workplace investigations, it may violate the NLRA if it requires more confidentiality than strictly necessary. Although the NLRB previously suggested that an employer could require temporary confidentiality during an investigation for legitimate reasons (e.g., to avoid witnesses colluding), the new decision suggests employers need a more tailored policy, or even a case-by-case assessment, for each investigation or witness.

Next Steps

Employers (and their employment attorneys) should review all handbooks, policies, agreements, and other documents containing workplace policies, procedures, and rules as soon as possible. The Stericycle decision is retroactive, so there is no reason to wait until 2024 to figure out how to comply with the new standard.