Employment Law Alert: Your Handbook is Probably Illegal After the NLRB’s

Groundbreaking Decision

Over the last year, the National Labor Relations Board (NLRB) has made a series of moves, which includes attacks on employee handbooks in its Stericycle, Inc. decision– and, unless your labor lawyers have updated it recently, your current handbook may be unlawful.

The ruling once again puts employers in the position of having to reconsider their workplace policies to align with the evolving priorities of the NLRB, regardless of whether they are unionized or not. This ruling has significant implications for all employers nationwide, including those in the restaurant and hospitality industry. While some employers already conduct annual reviews of their handbooks, it is now necessary to do so more frequently in light of this groundbreaking decision and the other NLRB decisions and General Counsel memoranda expected in the foreseeable future.

Here’s what you need to know about this decision and the adjustments you need to make to your policies to ensure they are compliant.

How Did We Get Here?

Under Section 8(a)(1) of the National Labor Relations Act (NLRA), it is an unfair labor practice for employers to interfere with, restrain, or coerce employees in exercising their right to engage in concerted activities under Section 7. Section 7 of the NLRA guarantees employees the right to self-organize, form and join a labor union, and engage in other concerted activities for purposes of collective bargaining or other mutual aid or protection. These rights exist in both unionized and non-unionized workplaces.

For over 20 years, the NLRB has frequently analyzed whether specific rules established by employers are inherently unlawful under the NLRA. In 2004, the NLRB held that an employer violates Section 8 when it implements a policy, rule, or provision in a handbook that an employee could “reasonably construe” as preventing the employee from exercising their Section 7 rights.

In 2017, the NLRB shifted its stance with an employerfriendly decision. There, the Republican-majority Board established it would determine whether workplace rules were legal by weighing the potential effect on NLRA rights against the valid justification behind the rule. Unlike the approach taken in previous decisions, the 2017 ruling emphasized that the employer’s legitimate business interests in upholding a workplace rule should be considered in the NLRB’s evaluation process.

What Changed?

In August 2023, the NLRB concluded the criteria established by the Trump-era Board provided excessive latitude for employers to implement overly broad workplace rules. As a result, the NLRB overturned that decision and adopted a new two-part standard that closely resembles the employee-friendly standard from 2004.

First, the NLRB’s General Counsel must prove an employee could reasonably interpret a challenged workplace rule as having a coercive meaning, which leads to a chilling effect on a protected activity. Here, the NLRB considers the following factors from the perspective of the “economically dependent employee who contemplates engaging in Section 7 activity”:

• The specific wording of the rule;

• The specific industry;

• The workplace context in which the rule is maintained;

• The specific employer interests the rule may advance; and

• The statutory rights in which the rule may infringe.

This is a low burden, as the General Counsel must only show the challenged workplace rule has a “reasonable tendency” of violating an employee’s rights under Section 7. If the General Counsel can meet this burden, the challenged workplace rule is presumptively unlawful.

The second step of the analysis allows the employer to rebut the presumption that the challenged workplace rule is unlawful. The employer must prove the rule advances a legitimate and substantial business interest; and the employer cannot advance such interest with a more narrowly tailored rule. The workplace rule will be upheld if the employer can prove both of these elements.

What Are Some Stericycle Implications on the Restaurant and Hospitality Industry?

Handbook Policies Likely Unlawful: The following four policies are now likely to be deemed unlawful: (1) workplace civility rules; (2) loitering rules; (3) rules prohibiting unlawful strikes, work stoppages, and slowdowns; and (4) restrictions on video and/or cell phone recording.

Enforcing Unlawful Policies: The NLRB may invalidate a disciplinary decision made by an employer pursuant to an unlawful policy. This includes, but is not limited to, reinstatement and an award of backpay.

Enhanced Employee Protections: The positions taken by the current Board grant employees expanded rights for engaging in protected concerted activities like discussing wages, working conditions, and union organizing.

Increased Unionization Efforts: The agenda of the current Board has been to make organizing easier for employees. The Board has encouraged employees to organize with the inference that doing so will lead to higher wages and better benefits.

Impact on Business Operations: This new standard may have implications for the day-to-day operations of restaurants and hotels. For instance, disciplinary actions and terminations may also be impacted, requiring employers to show that such measures are not retaliatory for engaging in protected activity under Section 7.

Looking Forward?

Since Stericycle was issued, NLRB administrative law judges have decided several cases analyzing handbook policies under this new standard. Some handbook policies found to be overbroad and unlawful include, but are not limited to, arbitration clauses, confidentiality policies, non-disparagement provisions, no-recording rules, policies prohibiting the making of false, vicious, or malicious statements, removal and/or return of company property and information policies, social media policies, solicitation and/or distribution policies, and workplace conduct policies. As seen during the Obama administration, we expect the NLRB to continue to find other policies unlawful that were otherwise lawful during the Trump-era Board.

We have seen from recent NLRB decisions and guidance that these changes can impact both unionized and nonunionized businesses. For example, last year, the NLRB issued a decision that scrutinized employee severance and non-compete agreements. Generally, the NLRB concluded it will invalidate these agreements if they include language that could be construed to broadly restrict a worker’s rights to speak about the agreement or otherwise talk negatively about their former employer, among other things.

Given the rapidly evolving regulatory landscape, employers are strongly advised to maintain close collaboration with their internal HR teams and legal advisors to stay abreast of the latest developments.

This article is courtesy of Fischer & Phillips. If you have any questions about how this development impacts your organization, please contact Andreas Mosby, Attorney at Law, at amosby@fischerphillips.com.