The NLRB Reframes the Standard for Review of Employer Handbooks

In a monumental decision last week, the National Labor Relations Board (“NLRB” or the “Board”) overruled 13 years of precedent and reframed the test for determining whether “facially neutral” employer handbooks, rules, and policies can be “reasonably construed” to violate the National Labor Relations Act (“NLRA”).  A link to the NLRB’s decision can be found by clicking here. Critically, the decision impacts all businesses because it is an unfair labor practice under the NLRA to set workplace rules or take an employment action that restrains or coerces an employee from exercising certain rights under the Act, regardless of whether the employer is a unionized or non-unionized workplace.

In the case of The Boeing Company and Society of Professional Engineering Employees in Aerospace, 365 NLRB No. 154 (2017)(the “Boeing Company”), the NLRB was confronted with the issue of whether the employer’s policy of restricting the use of camera-enabled devices on its property, which was facially neutral, was lawful under the precedent established in Martin Luther Memorial Home, Inc. d/b/a Lutheran Heritage Village-Livonia and Vivian A. Foreman, 343 N.L.R.B.  646 (2004) (hereinafter, “Lutheran Heritage”).  Under the prior test in Lutheran Heritage, if a rule or regulation didn’t explicitly restrict Section 7 activity under the NLRA (i.e. the right to engage in concerted activities for the purposes of collective bargaining or other mutual aid and protection), in order to determine whether the rule was unlawful, the NLRB had to examine whether: “(1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.”

Under the new standard announced in the Boeing Company, when the NLRB is presented with a “facially neutral policy, rule or handbook provision” that could potentially interfere with the exercise of NLRA rights, the NLRB will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) the legitimate justifications associated with the rule.  See the Boeing Company decision.  The NLRB anticipates having 3 categories of employer policies:

Category 1 will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule….Examples of Category 1 rules are the no-camera requirement in this case….

Category 2 will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.

Category 3 will include rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.  An example of a Category 3 rule would be a rule that prohibits employees from discussing wages or benefits with one another.

See the Boeing Company decision (emphasis in original).  The NLRB made clear that the foregoing categories are not technically part of the new test; however, the Board will determine, in future cases, what types of employer rules fall into each category.

In advancing the new test, the NLRB noted inconsistencies in application of the Lutheran Heritage test, and that the prior test failed to take into account legitimate justifications by an employer that might be associated with a particular rule or policy.  The NLRB believes the test set forth in the Boeing Company addresses these concerns, and will lead to predictable and uniform decisions regarding employer policies.

Applying the new standard to the Boeing Company, the NLRB found that the no-camera rule could potentially affect the exercise of Section 7 rights, but the impact was minimal, and it was outweighed by the company’s justifications for the rule (falling into Category 1).  Thus, the NLRB determined that the company lawfully maintained a no-camera rule.

The decision in the Boeing Company case is being viewed by many as a rollback of the “employee-friendly” NLRB policies ushered in during the Obama Administration.  The decision in the case was made by a 3-2 majority of the Board, which fell along party lines despite the NLRB theoretically being a non-partisan body.  Notably, the decision in the Boeing Company case was made just days before the expiration of the term of the Chairman of the NLRB, Philip Miscimarra, who declined to serve a second term.  Mr. Miscimarra’s absence will leave the NLRB with a likely 2-2 deadlock on cases until a new member of the Board is nominated and confirmed.

At press time, no appeal of the decision in the Boeing Company case had yet been filed, and the full impact of the decision remains to be seen.  Employers are well-served to consult with counsel to determine whether any facially neutral policies previously considered to be unlawful under the Lutheran Heritage rule may now survive scrutiny under the new standard in the Boeing Company.