NLRB Shifts Balance Toward Employee Rights When Assessing Lawfulness of Employer Rules

The National Labor Relations Board (NLRB) recently announced a decision in Stericycle Inc., in which it adopted a new standard for evaluating the legality of employer policies under Section 8(a)(1) of the National Labor Relations Act (NLRA). In its ruling, the NLRB overruled its previous decisions in Boeing Co. (2017) and LA Specialty Produce Co. (2019), in which it had articulated a different standard.

The NLRB ruled in Stericycle that certain types of work policies, such as those relating to confidentiality, nondisparagement, and outside employment, are not always categorically lawful. According to the NLRB’s decision, the previous standard for assessing the legality of these rules, which the NLRB first stated in Boeing and later clarified in LA Specialty Produce Co., gave too little weight to the burdens that work rules could impose on employees’ rights under the NLRA. Therefore, the standard allowed employers to implement overbroad work policies that adversely affected and unnecessarily burdened the protected rights of workers. That standard also failed to require the employer to narrowly tailor its rules to promote only its legitimate and substantial business interests.

Under the new standard adopted in Stericycle, an employer rule is presumed unlawful if it has a reasonable tendency to prevent workers from exercising their rights under the NLRA. However, the employer can rebut that presumption by proving that the rule furthers a legitimate and substantial business interest and that a more narrowly tailored rule would not have the same effect. If the employer is successful in its rebuttal, then its policy will be considered lawful and may remain in effect.

In a dissent, NLRB’s Marvin Kaplan stated that the new Stericycle standard gives dispositive weight to the employee rights side of the balance without adequate consideration of the employer’s interests. He also expressed his preference for the now-overruled Boeing standard, as giving sufficient weight to both employee and employer rights and balancing them against one another in a truly meaningful way.

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