NLRB Ruling Adopts New Standard Considering Lawfulness of Employee Handbook Provisions

NLRB Ruling Adopts New Standard Considering Lawfulness of Employee Handbook Provisions

On August 2, 2023, the National Labor Relations Board (NLRB) announced its decision in Stericycle. This decision is a new way of determining the lawfulness of workplace policies maintained by private-sector employers, regardless of whether they are unionized. In the future, the NLRB will assess if a workplace policy could conceivably have a “chilling effect” on the employee’s Section 7 rights- that is, the rights of employees to engage in protected concerted activities to discuss terms and conditions of employment.

This new rule is a significant departure from prior NLRB precedent, which had held that certain workplace rules were presumptively acceptable for the employer to maintain. Once a work rule is challenged for its alleged chilling effect on Section 7 rights, the burden will shift to the employer to demonstrate that the challenged rule advances a legitimate and substantial business interest, and the employer cannot advance that interest with a more narrowly tailored rule. The work rule would be lawful if the employer meets this burden. Under the Stericycle analysis, the employer’s intent on maintaining a work rule is immaterial, as the important consideration is viewed from the perspective of the employee subject to the policy when considering engaging in Section 7 activities.

As a result of this decision, employers urgently need to review and rewrite their existing policies to align with the new Stericycle rule. Handbook provisions that could be subject to particular scrutiny would include social media policies, non-disparagement of company management, products, or services, policies prohibiting insubordination, the confidentiality of investigations, the use of cameras and recording devices, and outlining rules for safety complaints. An employee who challenges the legitimacy of an employer’s work rules under the Stericycle standard could file a charge with the NLRB, resulting in a costly proceeding and potential penalties.

The Stericycle decision will undoubtedly be appealed, and it could take several months before a final Court Order is issued. Meanwhile, because of the nature of the ruling, the NLRB has stated that it intends to begin immediate enforcement of the Stericycle standard, which could affect damages like back pay liability for employees who were terminated for violating work rules and then filing a charge to challenge them. Therefore, employers should consider taking action now, rather than waiting months or years for the Stericycle decision to be finally appealed through the court system.

If you have questions concerning the Stericycle decision or any policies you want reviewed, please contact Matthew Stokely at 937-223-1130 or