The National Labor Relations Board ruled on August 2, 2023, that employers’ workplace rules — such as those found in employee handbooks — will be evaluated under a more restrictive test that will surely impact how employers draft and apply their workplace policies. The board’s decision extends to all private sector employers, both union and non-union.

By a 3-1 split, the board’s decision in Stericycle, Inc. resets the standard by which workplace rules and policies are evaluated. Under the Stericycle standard, the NLRB will analyze whether an employer’s rule or policy has a reasonable tendency, in the eyes of an employee, to chill or inhibit employees from exercising their Section 7 rights, such as the right to engage in concerted activity related to terms and conditions of employment. If the board finds the rule or policy has such a reasonable tendency, the rule is presumed unlawful and the burden shifts to the employer to rebut the presumption by showing that the rule advances a legitimate and substantial business interest that cannot be achieved with a more narrowly tailored rule.

History of Board’s Rulings on Workplace Rules

The Stericycle decision is the latest chapter in the board’s back-and-forth rulings on workplace rules. In large part, Stericycle revives the NLRB’s 2004 decision in Lutheran Heritage, where the board held that workplace rules would be considered unlawful when employees would “reasonably construe” a rule to prohibit their ability to engage in concerted activity protected by the National Labor Relations Act.

In 2017, the board’s decision in Boeing (and later clarified in LA Specialty Produce Co.) established a balancing test that evaluated the employer’s legitimate reasons for a workplace rule against the potential impact the rule would have on employee rights. Boeing further set forth categories of workplace rules, identifying certain rules that were presumptively unlawful and presumptively lawful.

The Stericycle decision explicitly overrules the Board’s reasoning and balancing test established in Boeing. Moreover, the NLRB will apply its new standard on a case-by-case basis. As such, NLRB case law that evaluates various types of employer policies will be helpful as employers work to revise their policies and satisfy the new standard.

Expected Impact on Employers

The Stericycle decision continues the NLRB’s recent trend of overruling case law precedent in a manner that subjects common employer practices and policies to closer scrutiny. The extent to which the decision requires substantial changes to employer policies and handbooks should be evaluated on a case-by-case basis. Common policies and rules – such as those that govern workplace civility and professionalism, workplace recording and social media use – may require modification to defend against potential NLRB challenges. The NLRB stated in Stericycle that the new standard will apply retroactively to existing cases before the board, so we may see the impact of the decision in the very near future. In any event, the NLRB’s decision warrants a fresh look at handbooks and policies that could be scrutinized under the board’s new analysis.