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NLRB Issues Employer-Friendly Decision Regarding Employee Handbooks

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By Arthur W. Brumett II

January 16, 2018

On December 14, 2017, in The Boeing Company, 365 NLRB 154 (2017), the National Labor Relations Board (“NLRB”) established a new standard for reviewing employee handbook provisions that allegedly restrict an employee’s rights under Section 7 of the National Labor Relations Act (“NLRA”). Previously, the NLRB’s “reasonable construction” standard caused confusion among employers as to what conduct could be prohibited in employee handbooks, and what policy language was permissible. The NLRB’s new three-category standard provides a clearer guide for employers, which will enable them to better protect their business interests.

Section 7 protects employees’ rights to self-organize or collectively bargain, including engaging in concerted activities for those purposes or other mutual aid and protection. Section 8(a)(1) makes it unlawful for an employer to “interfere with, restrain, or coerce employees in the exercise of rights guaranteed in Section 7.” These provisions apply to both union and non-union employers.

In recent years, the NLRB had taken an expansive view in its application of Sections 7 and 8(a)(1) to employee handbooks. In Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), the NLRB established the “reasonable construction” test that was utilized for 13 years. The Board would first inquire as to whether the handbook rule in question explicitly restricted activity protected by Section 7. If it did not explicitly restrict such activity, the Board then asked whether an employee would “reasonably construe” the language to prohibit Section 7 activity. In applying this standard, the Board has issued numerous decisions finding seemingly neutral handbook policies to be unlawful.

Memorandum GC15-04 from the NLRB’s Office of General Counsel, issued on March 18, 2015, provided a detailed analysis of the Board’s application of the “reasonably construed” standard to various handbook policies including, but not limited to, conflicts of interest, social media, confidentiality, and conduct rules.   In providing examples, the Board would find a handbook provision to be lawful in one instance, while finding a nearly identical provision to be unlawful in another based upon the overall context of the policy. These inconsistent, and seemingly arbitrary examples posed difficulty for employers who wanted to ensure compliance. Many handbooks were revised to avoid vague provisions such as those requiring employees to be “respectful to management and the company.” Employers also added caveat language at the end of certain provisions indicating that “this policy is not intended to limit any employee’s rights under Section 7 of the National Labor Relations Act.” Under the Lutheran Heritage standard, no matter the amount of diligence exercised by employers to ensure compliance, there always remained a degree of uncertainty.

In the Boeing decision, the NLRB abandoned the troublesome Lutheran Heritage standard and established the following three-category test for lawfulness:

  • Category 1 will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. Examples of Category 1 rules are…the “harmonious interactions and relationships” rule…and other rules requiring employees to abide by basic standards of civility. 
  • Category 2 will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications. 
  • Category 3 will include rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule. An example of a Category 3 rule would be a rule that prohibits employees from discussing wages or benefits with one another. 

The Boeing case involved a rule restricting the use of camera-enabled devices such as cell phones on Boeing property. Given Boeing’s legitimate concerns regarding security and trade secrets, the Board placed it in Category 1 and deemed it lawful.

In light of the Boeing decision, employers should conduct a review of their employee handbooks to determine the ongoing necessity of any revisions prompted by the NLRB’s 2015 General Counsel Memorandum and its interpretation of the now defunct Lutheran Heritage decision.

If you have any questions or issue arising in the employment context, please feel free to call any one of our Employment Practices Defense Liability Group Members.

This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.

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