NLRB Imposes New Limits on Employer Work-Rules
The NLRB has held that employers violate the National Labor Relations Act when they issue facially neutral work rules, like a no-camera policy in the workplace, that a “reasonable employee,” viewed through the lens of economic dependence on their employer, could believe infringes on their Section 7 rights.
This overturned a Trump-era precedent that divided employer work rules into three categories. It is a return to the Obama-era Board approach that resulted in frequent challenges to employee policies.
This affects unionized and non-unionized employers, who will likely face greater NLRB scrutiny over previously uncontroversial work rules—regardless of an employer’s intent behind issuing it.
Facially Neutral Work-Rules Must be ‘Narrowly Tailored’ to Serve Employers’ Legitimate and Substantial Business Interests and Balanced Against Employees’ Section 7 Rights
The Trump-era Board created a three-category system for adjudicating whether employer work rules violated Section 8(a)(1): universally legal, conditionally legal, and uniformly illegal. For facially neutral work rules that may be conditionally legal, the Board used a balancing test that weighed an employer’s legitimate business interests linked to the work rule, such as maintaining workplace discipline, against an employee’s interest in exercising their Section 7 rights, which include the rights to organize unions, collectively bargain with their employer, and engage in protected concerted activity.
This was viewed as a rejection of the “reasonable employee” test previously used by the Obama-era Board, which found a challenged work-rule unlawful because it could be interpreted, under some hypothetical scenario, as potentially limiting some Section 7 activity.
The Board has abandoned this interpretation of the reasonable employee test, saying its primary problem was that it permitted employers to adopt overbroad work rules that chilled employee rights because it failed to reflect the true coercive potential of the rules. The old rule chased an abstract goal of predictability which, in the majority’s view, was unlikely to be achieved given the variety of work rules and their settings. The Board felt it better to sacrifice complete certainty and predictability if it comes at the expense of arbitrarily expanding the universe of work rules deemed always lawful to maintain, at the obvious expense to employees.
The core holding is that employer work rules violate the Act if a reasonable employee can view the rules as a potential infringement of the employee’s Section 7 rights, considering the employee’s economic dependency on the employer.
From a litigation standpoint, this now requires the NLRB General Counsel to first show that an employer’s work rule could be reasonably interpreted to infringe on Section 7 rights when viewed from the perspective of an economically dependent employee under certain circumstances. Assuming the NLRB General Counsel meets that initial burden, the challenged work rule is presumptively invalid and can only be saved if the employer rebuts the presumption by proving the work rule advances a legitimate and substantial business interest and that the employer is incapable of pursuing that interest with a more narrowly tailored version.
Critically, an employer’s intent behind a work rule (i.e., no intention to interfere with employee Section 7 rights) is immaterial and may not serve as a defense to an unfair labor practice charge. If an employee could reasonably interpret the work rule as coercive toward their Section 7 rights, it is presumptively invalid, even if a reasonable, contrary, and non-coercive interpretation exists.
The Board declined to provide practical examples of employer work rules it will now deem to violate the Act, and if or how they could be narrowly tailored to survive scrutiny.
The Board also left unaddressed what it considers sufficiently legitimate and substantial business interests so employers can prospectively justify their existing and future work rules.
The NLRB also declined to elaborate on what exactly it means by an employee’s economic dependency on their employer.