February 05, 2024

Employee Handbook Review: NLRB Applies New Strict Standard Concerning Employer Work Rules

The National Labor Relations Board (NLRB) is a federal agency dedicated to the governance of the National Labor Relations Act (the Act).  Section 7 of the Act guarantees employees "the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection," as well as the right "to refrain from any or all such activities."  Section 8(a)(1) of the Act makes it an unfair labor practice for an employer "to interfere with, restrain, or coerce employees in the exercise of these rights."  The Act applies to all employers, with or without active union engagement, including private employers.  The NLRB investigates unfair labor practices.

Over the years, the NLRB has wrestled with the best way to advance their purpose of determining whether a work rule compromises employee rights under the Act.  Until recently, the Boeing standard was applied.  Briefly stated, the Boeing standard provided for evaluation of whether a facially neutral work rule unlawfully infringed on concerted employee activity.  Under Boeing, the NLRB would examine the nature and extent of the potential impact on NLRA rights and determine if legitimate justifications substantiated the rule.  Boeing also provided for categorization of work rules.  Under this categorization, some rules were, by definition, valid.

In its latest Decision in Stericycle Inc. and Teamsters Local 628, the Board concluded that the Boeing standard was too accommodating.  It permitted employers to adopt overbroad work rules that chill employees’ exercise of their rights under Section 7 of the Act.  The Board went on to assert that under Boeing, an employer was not required to narrowly tailor its rules to promote its legitimate and substantial business interests without unnecessarily burdening employee rights.  The Board also rejected Boeing’s categorical approach to work rules, under which certain types of rules were determined lawful, regardless of how they were drafted or what legitimate business interests they purportedly served.

NLRB Chairperson, Lauren McFerran stated, “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.”

Under the new standard, the NLRB must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights.  If the NLRB can sufficiently sustain this burden, then the rule is presumptively unlawful.  The employer, however, may attempt to defend the rule by:

  • Establishing that the rule advances a legitimate and substantial business interest; and,
  • Proving the employer is unable to advance that interest with a more narrowly tailored rule.

If the employer can substantiate its defense, then the work rule will be found lawful.

The NLRB, in Stericycle, defended the new stricter standard by asserting, “the current standard (Boeing) fails to account for the “economic dependency” of employees on their employers.  Because employees are often apprehensive about potential discharge or discipline, they are inclined to construe an ambiguous work rule to prohibit statutorily protected activities and to avoid the risk of violating the rule by engaging in such activity.  In turn, Boeing gives too little weight to the burden a work rule could impose on employees’ Section 7 rights.”

The NLRB maintains that the new, strict standard is balanced because “an employer can rebut the presumption that a rule is unlawful.”  However, a closer examination of the NLRB approach questions any measured balance.  They intend to:

  • Interpret the rule from the perspective of an employee who is subject to the rule and economically dependent on the employer.
  • Adopt the perspective the employer’s intent in maintaining a rule is immaterial.
  • Apply an analysis as if the employee could reasonably interpret the rule to have a coercive meaning, even if a contrary, noncoercive interpretation of the rule is also reasonable.

The NLRB derives its authority from an aged decision of The Supreme Court in Republic Aviation Corp. v. NLRB, 324 U.S. 793, 798 (1945) which provided the NLRB with the “authority and flexibility” to “accomplish the dominant purpose” of the Act:  to protect “the right of employees to organize for mutual aid without employer interference.”  The NLRB has identified two (2) specific goals in pursuit of this purpose:

  • Determine the appropriate interpretive principles to apply in evaluating the potentially deleterious impact of a work rule on employees’ exercise of their protected rights; and,
  • Determine how to ensure a work rule minimizes any potential impact on employee rights, notwithstanding the legitimate business interests that the employer may be trying to advance.

The NLRB’s new standard heightens its focused scrutiny on positive work rules.  The Board will now consider a rule presumptively unlawful if it “could” be interpreted to limit employee rights.  This means a rule may be invalidated even if there are alternative interpretations that are consistent with employee rights and legitimate business interests.  In addition, a rule may be determined invalid based on potential interference with activities that were not, or could not have been, foreseen by the employer when drafted.  This applies even if the rule was never interpreted in an unlawful manner.  This heightened scrutiny requires employers to work with learned counsel to navigate the language, application and purpose of their rules and policies.

The strict new standard imposed by the NLRB through Stericycle will impact future review and application of workplace rules and handbooks.  The Board will review each rule, adopting the perspective of the employee, and presume a biased intent based on the “economic dependency” of the employee/employer relationship.  If the NLRB determines a rule is invalid, the employer must timely remove, redact, or replace unlawful language and post and distribute notices to employees acknowledging the violation and providing information about their rights under the Act.  Employers must review their workplace rules in view of this new standard to ensure, to the extent possible, compliance.

Our Employment Practices Group is available to help navigate this difficult and potentially dangerous modification to the standard of review of workplace rules as contained in your Employee Handbook.  Please contact James F. Devine, Esq., Employment Practices Group Chair, with questions and concerns at JFDevine@c-wlaw.com or 717-735-0325.


The information in this article is provided for general informational purposes only and may not reflect the current law in your jurisdiction.  By reading this article, you understand that there is no attorney-client relationship between you and Cipriani & Werner, P.C., or any of our attorneys.  No information contained in this article should be construed as legal advice from Cipriani & Werner, P.C. or the individual authors.