NLRB Ruling Provides More Flexibility for Employer Handbook Policies

Board overruled standard that deemed policies unlawful if reasonably interpreted to limit labor rights

Lisa Nagele-Piazza, J.D., SHRM-SCP By Lisa Nagele-Piazza, J.D., SHRM-SCP December 18, 2017
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The Republican-led National Labor Relations Board (NLRB) has issued a decision that will afford employers more deference for their handbook policies.

The board overruled a prior decision that placed limits on employer handbook policies that could be "reasonably construed" by workers to limit their right to engage in protected concerted activity—so-called Section 7 of the National Labor Relations Act (NLRA) rights.

Under the old standard, many policies—such as confidentiality, civility and social media policies—that weren't meant to curb employees' rights under Section 7 were still deemed unlawful even if an employer had a legitimate justification for the rule.

A lot of policies were being struck down that were positive for employees, such as workplace civility rules that help employers deal with issues like sexual harassment and other misconduct, said Daniel Johns, an attorney with Ballard Spahr in Philadelphia.

The new standard seems to tell us that if there is a policy that could potentially interfere with employees' Section 7 rights, the board is now going to look at the nature and extent of the interference and any justifications the employer may have, said Neoma Ayala, an attorney with Cole Schotz in Hackensack, N.J. 

"The new standard provides a common-sense approach in terms of how to evaluate whether work rules impact employee rights under the NLRA," said Steve Miller, an attorney with Fisher Phillips in Chicago. Though he noted that it remains to be seen how the standard will be applied to specific circumstances.

Boeing's No-Camera Policy

In a 3-2 decision on Dec. 14, the board replaced the "reasonably construe" standard with a new balancing test that will consider the following factors with regard to a "facially neutral" handbook policy (i.e., a policy that is not worded to intentionally interfere with workers' Section 7 rights):

  • The nature and extent of the potential impact on NLRA rights.
  • The employer's legitimate justifications associated with the rule.

In the case, the board considered the legality of the Boeing Company's policy restricting the use of camera-enabled devices, such as cell phones, on company property. Workers had to have a valid business need and an approved camera permit to bring recording devices to work. 

Boeing's policy didn't explicitly restrict employees from discussing the terms and conditions of their employment or engaging in other activities protected by the NLRA. The policy wasn't adopted in response to NLRA-protected activities or applied to restrict such activities. However, under the "reasonable construe" standard, a judge found that Boeing's rule violated the act. "The judge gave no weight to Boeing's security needs for the rule," according to the NLRB's decision.

[SHRM members-only HR Q&A:  What is the function of the National Labor Relations Act (NLRA)?]

The board said there are fundamental problems with the "reasonably construe" standard. It "entails a single-minded consideration of NLRA-protected rights, without taking into account any legitimate justifications associated with policies, rules and handbook provisions," the decision stated.

As the result of the new balancing test, the board outlined three categories of employment policies, rules and handbook provisions:

  • Category 1 includes lawful rules that either don't interfere with NLRA-protected rights or for which the possibly adverse impact on protected rights is outweighed by the employer's justifications for the rule (as with Boeing's no-camera rule).
  • Category 2 consists of rules that should be scrutinized on a case-by-case basis as to whether they would interfere with NLRA rights, and if so, whether there is a legitimate justification for the rules.
  • Category 3 covers unlawful rules that prohibit or limit NLRA-protected conduct and for which the adverse impact on workers' rights is not outweighed by the employer's justifications for the rules. An example would be a rule that prohibits employees from discussing their wages or benefits with each other.

Under its new standard, the NLRB held that Boeing's no-camera policy was lawful because, though it potentially affected the exercise of NLRA rights, the impact on workers was "comparatively slight" and outweighed by security justifications.

New Direction

President Donald Trump appointed two Republicans to the NLRB in 2017, giving the board a 3-2 Republican majority. But the majority was short-lived, since Chairman Philip Miscimarra stepped down on Dec. 16.

In the final days of Miscimarra's tenure, the board also rejected the Obama-era joint employer rule holding that indirect control by one organization over another was enough to establish a joint employer relationship. Under the new rule, there must be direct control—which makes it more difficult for workers at franchised businesses to form unions.

"The board was probably trying to get everything out under the wire before its decisions could be a 2-2 split without precedential value," Ayala said.

The NLRB will likely return to a 3-2 Republican majority when the fifth seat is filled but it's not clear when that will happen.

Handbook Updates?

The Boeing decision shows that the new appointments to the board are going to have an impact on the board's prior stance, which was perceived as pro-union, Johns said. "There's more of a chance that this board will give weight to an employer's legitimate interests."

Facially neutral policies on confidentiality, social media use, and nondisparagement, for example, may be given more credence. Johns cautioned, however, that the board could rule the other way again in a few years if its composition changes.

Handbook policies probably don't need to be updated in light of the Boeing decision, because they are likely more generous to workers than what the new standard requires, Ayala said.

Miller said employers that softened or removed civility, confidentiality and other related policies under the prior standard may want to consider putting them back in the handbook if they believe they have a legitimate justification. He noted, however, that even if a policy is lawful, employers have to apply it consistently, otherwise it could still run afoul of the NLRA.  

 

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