Even if labor unions are not part of your business’s vocabulary, you need to know and understand some things about the National Labor Relations Act (NLRA). Among other things, the NLRA protects employees’ right to engage in “concerted activity” under Section 7 of the Act, protecting them when they organize and act together to do things like improve their pay and working conditions, including discussing working conditions. This rule applies even when there is no union.
The NLRA is enforced by the National Labor Relations Board (NLRB). In recent years, the Board focused on striking down employee handbook provisions that it decided violated these Section 7 rights to concerted activity. But that trend has started to shift. In this post, we’ll explore the reason for the change, as well as some new guidance from the General Counsel of the NLRB about what employee handbook provisions are or are not likely to violate the law.
Lutheran Heritage Village-Livonia: The “Reasonably Construed” Standard
Back in 2004, the NLRB decided a case called Lutheran Heritage Village-Livonia. In that case, the Board established a standard for deciding when an employer’s workplace rule, even though it appeared neutral, affected an employee’s ability to exercise his or her Section 7 rights. The Lutheran Heritage standard was pretty harsh for employers: even if the rule did not explicitly restrict Section 7 rights (and even if it was never applied that way), if the rule would be “reasonably construed” by employees to keep them from exercising rights to organize or act together, or discuss working conditions, it violated the NLRA.1 This led to a lot of employee handbook provisions getting struck down as unlawful, even if they had never actually been applied to limit an employee’s rights.
The Boeing Company: Balancing Rights
Late last year, the NLRB shifted course. In the Boeing case, the NLRB overturned the Lutheran Heritage standard and replaced it with a new test.2 The new Boeing standard focuses on balancing employees’ and employers’ respective rights:
[W]hen evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.3
The decision also introduced three categories of rules in order to provide greater guidance to employees and employers:4
- Category 1: rules that the Board designates as lawful
- Category 2: rules that need a case-by-case examination of the balancing test laid out in Boeing
- Category 3: rules that the Board will designate as unlawful
This means that the NLRB will no longer automatically strike down rules just because, in some possible interpretation, they could affect employees’ rights.
General Counsel Memo: An Overview
In light of this case, the General Counsel issued a memo with guidance going forward. This memo is directed at the regional offices that enforce the NLRA, but it is helpful for employers as well. While cases will still be decided on their facts, as directed by Boeing, this guidance gives employers a better idea of what to expect under the new rules, and how the facts could be interpreted.
The GC’s memo focuses on Boeing’s three-tiered category system and gives practical examples of the types of rules which will fall into each category. Here are some highlights from the memo entitled “Guidance on Handbook Rules Post-Boeing,” which you can find here.
Category 1: Rules that are Generally Lawful
Category 1 rules are those that generally will not have any real impact on Section 7 rights. Plus, employers will typically have a strong legitimate reason for having these rules in their handbooks. So, on the balance, because employee rights won’t be substantially impacted, and employers have a great interest in maintaining the rules, simply having these types of rules on the books won’t violate the NLRA. Here are some of the rules that generally fall into this category:5
- Civility Rules
- No-Photography Rules and No-Recording Rules
- Rules Against Insubordination, Non-cooperation, or On-the-job Conduct that Adversely Affects Operations
- Disruptive Behavior Rules
- Rules Protecting Confidential, Proprietary, and Customer Information or Documents
- Rules Against Defamation or Misrepresentation
- Rules Against Using Employer Logos or Intellectual Property
- Rules Requiring Authorization to Speak for Company
- Rules Banning Disloyalty, Nepotism, and Self-Enrichment
As the memo explains in more detail, simply maintaining these types of rules is not enough to violate the NLRA. But companies should still make sure that they are not applying the rules in a way that restricts their employees’ Section 7 rights.
Category 2: Rules that Get a Case-by-Case Evaluation
The next category, Category 2, is the intermediate bucket. Rules placed in this category aren’t clearly in or out. Whether the rule violates the NLRA will depend on the facts and circumstances of the individual case. Here, they balance the employees’ Section 7 rights with the employer’s need for the rule. Some rules that might fall into Category 2 include banning off-duty conduct that might harm the employer, or a blanket rule against disparaging the employer. In some circumstances, the rule might pass under the NLRA, in others, impact on the employees’ NLRA rights means the rule must go.
Category 3: Rules that are Unlawful
Rules that fall into Category 3 are going to violate the NLRA, no matter how the employer justifies having them. These rules strike at the core of what the NLRA is designed to protect. The GC memo names two specific types of rules that will fall into Category 3:
- Confidentiality Rules Specifically Regarding Wages, Benefits, or Working Conditions. An employer cannot prohibit employees from discussing their wages, benefits, or working conditions. Having a rule that does this is going to violate the NLRA.
- Rules Against Joining Outside Organizations or Voting on Matters Concerning Employer. Employers cannot prohibit employees from joining a union, and when there are workplace rules that seem to do that, they will be unlawful.
More Guidance and Greater Flexibility
The post-Boeing NLRB gives employers a bit more flexibility on workplace rules without fear that they will be struck down. The GC’s guidance memo is a helpful resource to evaluate your workplace rules and policies. You may also want to have them reviewed by your legal counsel.