NLRB Changes Course And Issues New Common Sense Guidance For Employer Handbook Rules

Most employers are aware that employee handbook rules that impede employees’ abilities to engage in protected concerted activity – e.g., organizing unions, discussing wages, discipline or other terms and conditions of employment – run afoul of rights guaranteed by Section 7 of the National Labor Relations Act (NLRA). Under the prior administration the National Labor Relations Board (NLRB) took a very narrow view, finding that facially-neutral policies that could conceivably be construed to chill Section 7 rights are unlawful. As a result, employers were in peril of having the most innocuous workplace rules aimed at advancing basic employer interests, such as workplace civility, subject to challenge. Thankfully, the newly-constituted Board overruled years of precedent in favor of a much more reasonable and employer-friendly approach to assess the legality of employee handbook rules.

In December 2017, the Board issued its ground-breaking decision in The Boeing Co., 365 NLRB No. 154, announcing a new three category test that balances the employer’s interests in maintaining discipline and productivity and protecting its property, against employee rights to engage in concerted activities protected by the NLRA. On June 6, 2018, General Counsel of the NLRB issued a memorandum entitled “Guidance on Handbook Rules Post-Boeing” that serves as a useful roadmap for how the Board will apply its new three-category standard to a wide array of workplace rules commonly found in employee handbooks and other policies. The Guidance makes is clear that that the mere possibility that a workplace rule could be interpreted to preclude Section 7 activity is no longer a justification for finding the rule unlawful, and that “ambiguities in rules are no longer to be interpreted against the drafter, and generalized provisions should not be interpreted as banning all activity that could conceivably be included.”

The New Three-Category Test: When assessing the legality of workplace rules, the NLRB will now assign workplace rules to one of the following three categories:

Category 1: Rules that are Generally Lawful to Maintain. Rules in this category are generally lawful because when reasonably interpreted, they do not prohibit or interfere with employees’ exercise of NLRA rights, or because the potential adverse impact on those rights is outweighed by the employer’s legitimate business justification of the rule. The Guidance identified the following types of rules as falling into this category:

  • Civility rules (those requiring employees act civilly and refrain from disparaging clients, coworkers and others conducting business with the employer)
  • No-photography and no-recording rules (those requiring employees to secure prior approval from management before taking photographs in the workplace or recording workplace conversations)
  • Rules against insubordination, non-cooperation, or on-the-job conduct that adversely affects operations
  • Disruptive behavior rules
  • Rules protecting the confidential, proprietary, and customer information or documents
  • Rules against defamation and misrepresentation
  • Rules against using employer logos or intellectual property
  • Rules requiring authorization to speak for the company
  • Rules banning disloyalty, nepotism, or self-enrichment

Absent unlawful application of the foregoing rules, the Board will generally deem these rules lawful.

Category 2: Rules Warranting Individualized Scrutiny. Rules in this category are not obviously lawful or unlawful, and thus must be evaluated on a case-by-case basis to determine whether the rule would interfere with NLRA rights, and if so, whether any adverse impact upon these protected rights is outweighed by the employer’s legitimate justifications. The Guidance identifies the following “possible examples” of those rules requiring individualized scrutiny:

  • Broad conflict-of-interest rules that do not specifically target fraud and self-enrichment
  • Confidentiality rules that broadly encompass “employer business” or “employee information” (as opposed to lawful rules regarding customer or proprietary employer information, or unlawful rules that restrict employees from discussing wages and terms and conditions of employment )
  • Rules regarding disparagement or criticisms of the employer (as opposed to lawful civility rules regarding the disparagement of employees)
  • Rules regarding the use of the employer’s name (as opposed to lawful rules restricting use of the employer’s logo or trademark)
  • Rules generally restricting the ability of employees to speak to the media or third parties (as opposed to lawful rules restricting the ability of employees to speak to the media or third parties on the employer’s behalf)
  • Rules banning off-duty conduct that might harm the employer (as opposed to lawful rules banning insubordinate or disruptive work conduct, or unlawful rules specifically banning participation in outside organizations )
  • Rules against making false or inaccurate statements (as opposed to lawful rules against making defamatory statements)

If a category 2 rule is challenged, the Board will consider any factors raised by the parties or identified by Region that weigh in favor of either the rule’s negative impact on protected NLRA activity or the employer’s legitimate business interest furthered by the rule.

Category 3: Rules that are Unlawful to Maintain. Rules in this category are generally unlawful because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights outweighs any justifications associated with the rule. Examples of these rules include:

  • Confidentiality rules specifically restricting employees from discussing or disclosing information regarding wages, benefits or working conditions
  • Rules against joining outside organizations or voting on matters concerning the employer

The Guidance warns that Category 3 rules are so broad that they substantially impact the exercise of NLRA rights, and employers generally do not have a legitimate interest is such expansive restrictions where narrower rules would serve the employer’s legitimate goals.

Although the Guidance establishes the framework that will be applied by the Board in assessing the legality of facially-neutral workplace conduct rules, the Guidance notes that how the new Boeing standard will apply to rules requiring confidentiality of discipline or arbitration remains unclear and such cases must be submitted by the Regions to the Board’s Division of Advice. Moreover, the Guidance cautions that the application of a facially-neutral rule against employees engaged in protected NLRA activity is still unlawful.

What’s an Employer to Do? Employers should review their employee handbooks and other policies and evaluate how their policies stack up under the new Three Category Test announced in the Guidance.

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