August 11, 2023

When it Comes to Handbooks, Everything Old is New Again

In a not-so-surprising move, the National Labor Relations Board (NLRB) has ruled in favor of rejecting its current “balancing test” – used to determine whether an employer’s work rules are so overly broad as to chill employees’ exercise of their rights under Section 7 of the National Labor Relations Act (NLRA) – in favor of a more restrictive “reasonable interpretation” standard.

Section 7 of the National Labor Relations Act (NLRA) has long been interpreted broadly by the NLRB as protecting employees when they are engaged in disputes over wages, hours and working conditions among other similar disputes. Sec. 7 of the Act grants 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.”[i]

The NLRB’s newly announced legal standard – one that builds upon and expands prior precedents – for analyzing employer work rules harkens back to a time when it seemed virtually all employer policies reviewed by the NLRB were found in some way or another to violate Section 7 rights. Going forward (and retroactively) the NLRB will begin analyzing employer policies “from the perspective of an employee who is subject to the employer’s rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity. The overall view of the NLRB being that employees who are economically dependent on their employers are anxious to avoid discharge or discipline, reasonably inclined to construe ambiguous work rules to prohibit protected activities and as a result seek to avoid any risk of violation by forgoing such activities.

The NLRB also views its prior standard as failing to sufficiently require employers to “narrowly tailor” workplace rules to promote “legitimate and substantial business interests while avoiding burdening employee rights.” As such, the revised standard will allow an employer to rebut the presumption that a rule is unlawful by proving it advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule.

Considering this new standard, employers – union and non-union – should begin a comprehensive review of all current workplace rules through this new lens. Keeping in mind that as far as the NLRB is concerned, “the employer’s intent in maintaining a rule is immaterial” and what matters – from an NLRB perspective – is whether “an employee could reasonably interpret a rule to restrict or prohibit Section 7 activity.”[ii]

[i] 29 U.S.C. § 157.

[ii] This will be so even if the rule could also reasonably be interpreted not to restrict Section 7 rights and even if the employer did not intend for its rule to restrict Section 7 rights.