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New NLRB Standard Places Greater Scrutiny on Employers' Workplace Rules

    Client Alerts
  • August 10, 2023

On August 2, 2023, the National Labor Relations Board issued a groundbreaking decision, adopting a new standard to assess whether an employer’s workplace rules, including those found in handbooks, violate the National Labor Relations Act. This new standard aims to address rules that could inhibit employees from exercising their rights protected under Section 7 of the NLRA.

What does the NLRA protect?

Employees in the United States have the right to unionize or otherwise form, join, or assist labor organizations to advance their interests as employees. They also have the right to refrain from such activities. The NLRA guarantees these rights under Section 7 of the Act. It prohibits employers from interfering with, restraining, or coercing employees in the exercise of these rights, as outlined in Section 8(a)(1). 

The Board’s recent decision focuses on Section 8(a)(1) and addresses the standard for when an employer may be found liable for interfering with an employee’s Section 7 rights.

The New Standard and its Stated Goal: Addressing Overbroad Workplace Rules

The NLRB’s new standard represents a significant departure from previous precedent, placing greater scrutiny on an employer’s ability to establish workplace rules and policies. The primary focus of the new standard is to target overbroad rules that may discourage employees from exercising their Section 7 rights.  Importantly, this new standard applies only to facial challenges to work rules that do not expressly apply to employees’ protected concerted activity. The Board did not change existing law that an employer’s work rule will be deemed unlawful when it explicitly restricts Section 7 activity or was promulgated in response to union or other protected concerted activity. 

The New Standard and its Application: Taking the Perspective of the Employee

The standard requires that a challenged rule has to be shown to have a reasonable tendency to chill employees from exercising their Section 7 rights. The Board’s General Counsel will evaluate the rule from the perspective of an economically dependent employee who contemplates engaging in protected concerted activity. The employer’s intent in maintaining the rule is considered immaterial. If an employee could reasonably interpret the rule as coercive, the General Counsel will have met its initial burden of proof, even if a contrary, non-coercive interpretation is also reasonable. The Board rejected the dissenting member’s idea to give more weight to the employers’ interests. It instead adopted an approach that interprets the work rule “from the perspective of the economically dependent employee (a layperson, not a lawyer) who solely contemplates engaging in Section 7 activity.” 

Employer’s Opportunity to Rebut

If the General Counsel meets this initial burden, the employer has an opportunity to rebut by proving “that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule. If the employer proves its defense, then the work rule will be found lawful to maintain.” (emphasis added)

The Board has made clear that all previous decisions relying on the prior standards related to work rules, “including the categorical holding that the Board has made to find certain types of work rules always lawful to maintain,” are necessarily rejected and no longer valid. Further, the Board’s new standard will be applied retroactively to all pending cases in whatever stage.  This part of the holding addresses Trump-era NLRB decisions that reversed earlier NLRB precedent and required a demonstration of intent by the employer to deprive employees of Section 7 rights.  As with many recent NLRB decisions, this standard is likely to change, depending on which party controls the White House.

For now, each work rule and employer policy requires a case-by-case analysis to determine its lawfulness. One such policy the Board criticized was an employer’s use of a “no-camera policy” on the employer’s premises. The Board explained that this previous approval of a no-camera policy is now invalidated and employers should carefully consider whether such a policy is compliant with the Board’s new standard -- especially given “the importance of photo or video documentation of unfair labor practices, protected concerted activity, and the like,” according to the NLRB decision. While a no-camera policy may be legal in “one of the country’s most prominent defense contractors, [these policies] have no relevance to the overwhelming majority of employers who do not deal in ‘classified’ information, ‘export-controlled information,’ and the like.” 

Human Resources Departments should work closely with their in-house attorneys and outside counsel to fully evaluate what work rules may be implicated by this new standard and preemptively apply the NLRB’s analysis to figure out what work rules need modification.