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NLRB’s New Stericycle Inc. Decision Changes Workplace Rules Standards for Union and Non-Union Employers Alike
Aug 4, 2023

NLRB’s New Stericycle Inc. Decision Changes Workplace Rules Standards for Union and Non-Union Employers Alike

Topics: Union-Management Relations

On August 2, the National Labor Relations Board issued its decision in Stericycle, Inc., adopting a new legal standard for how the Board will evaluate workplace rules and policies that are challenged on the grounds that they interfere with or restrict employees’ National Labor Relations Act rights to engage in concerted workplace activity (“Section 7 rights”). The Stericycle decision overrules the previously articulated standard set forth by the Trump NLRB in Boeing Co. (2017) and LA Specialty Produce Co. (2019). The Stericycle decision was decided on a 3-1 basis, with Board Member Marvin Kaplan dissenting.  

In Stericycle, the Board held that the prior Boeing/LA Specialty Produce standard established by the Republican-dominated Trump Board permitted employers to adopt overbroad work rules that chill employees’ exercise of their Section 7 rights. “Boeing gave too little consideration to the chilling effect that work rules can have on workers’ Section 7 rights. Under the new standard, the Board will carefully consider both the potential impact of work rules on employees and the interests that employers articulate in support of their rules. By requiring employers to narrowly tailor their rules to serve those interests, the Board will better support the policies of the National Labor Relations Act,” said NLRB Chairman Lauren McFerran.

Under the new Stericycle standard, employers can promulgate and maintain workplace rules as long as they are narrowly tailored to “advance legitimate and substantial business interests,” and minimize the risks of interfering with workers’ rights to act collectively. Similar to the old 2004 Lutheran Heritage 2004 standard, employer rules and policies can and likely will be ruled unlawful if the NLRB believes that an employee can reasonably interpret them as restricting their Section 7 rights, even if there is a complete absence of evidence that any employee ever interpreted them in such a way.  Under Stericycle, an employer policy or rule is presumptively unlawful to maintain if an employee could reasonably interpret it to have a coercive meaning that in any way limits Section 7 rights to engage in concerted activity. The Board indicated that this new standard is to be applied retroactively and this new standard applies to both union and non-union workplaces.    

Kaplan’s dissent made the point that the majority’s decision;

  1. “directly conflicts with longstanding Board precedent”;
  2. is even more restrictive than the Lutheran Heritage standard; and 
  3. is speculative and gives too much emphasis on an employee’s potential interpretation, making it virtually impossible for employers to know what the actual standard is and making it very difficult for employers to be able to enact workplace standards. 

Kaplan’s dissent opines that we are returning to a bygone era that existed during the time of the Obama Board where “the Board majority rarely saw a challenged rule, it did not find unlawful.”

In light of the standard set forth in Stericycle, we believe that California union and non-union employers should:

  1. Expect significantly more challenges to their work rules and disciplinary actions before the NLRB on Section 7 grounds going forward;
  2. Re-examine their work rules (especially confidentiality rules, social media policies, disciplinary rules and policies) to determine if adjustments should be made to remove rules that appear to be in violation of the new Stericycle standard; and,
  3. Be careful, when implementing discipline or termination decisions, to recognize and analyze whether the decision can be challenged as being based on a rule or policy that will be interpreted as an unlawful restriction on Section 7 rights under the new Stericycle standard.

As the Board moves forward, we will see this rule applied to various types of policies and rules in the workplace. It will then become clearer exactly what the Board meant when it stated that rules will be unlawful if the rule could be reasonably interpreted as infringing on Section 7 rights. However, we believe that Kaplan was probably correct in his prediction that virtually any workplace rule can be given an interpretation that deems it a restriction on Section 7 rights under the Stericycle rationale, and we may very well be back to a situation where virtually every common workplace rule is struck down by the Board. Stay tuned to this blog for updates.  Subscribe here.

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Sacramento Office Managing Partner and Chair of CDF’s Traditional Labor Law Practice Group. Mark has been practicing labor and employment law in California for thirty years. His practice has a special emphasis on the representation of California employers in union-management relations and handling federal and state court litigation and administrative matters triggered by all types of employment-related disputes. He is also adept at providing creative and practical legal advice to help minimize the risks inherent in employing workers in California. He recently named “Sacramento Lawyer of the Year” in Employment Law-Management for 2021 by Best Lawyers®.
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