NLRB Establishes New Standard Governing Workplace Policies and Upholds No-Camera Policy | Practical Law

NLRB Establishes New Standard Governing Workplace Policies and Upholds No-Camera Policy | Practical Law

In Boeing Co., the National Labor Relations Board (NLRB) established a new standard for governing facially neutral rules, policies, and employee handbook provisions that may potentially interfere with rights under the National Labor Relations Act (NLRA), and overruled the "reasonably construe" standard of Lutheran Heritage Village-Livonia.

NLRB Establishes New Standard Governing Workplace Policies and Upholds No-Camera Policy

by Practical Law Labor & Employment
Law stated as of 02 Aug 2023 • USA (National/Federal)
In Boeing Co., the National Labor Relations Board (NLRB) established a new standard for governing facially neutral rules, policies, and employee handbook provisions that may potentially interfere with rights under the National Labor Relations Act (NLRA), and overruled the "reasonably construe" standard of Lutheran Heritage Village-Livonia.
NOTE: See the UPDATE at the end of this resource for subsequent developments affecting this decision.
On December 14, 2017, in Boeing Co., the panel (Board) heading the NLRB's judicial functions established a new standard for governing any facially neutral rule, policy, or employee handbook provision that may potentially interfere with an employee's rights under the NLRA. The Board overruled the "reasonably construe" standard of Lutheran Heritage Village-Livonia (Lutheran Heritage) and created a test that evaluates the potential impact on NLRA rights and legitimate justifications for the rule (343 N.L.R.B. 646 (2004)). (365 N.L.R.B. No. 154 (Dec. 14, 2017).) The NLRB also overruled any of its precedents holding that it violates the NLRA for an employer to maintain rules requiring employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.

Background

Boeing maintained a policy restricting employees' use of cell phones, laptops, and other camera-enabled devices on its property (although the devices were permitted on company property). The company established this rule because of security concerns for the classified and highly sensitive work done at Boeing's facilities. The rule did not explicitly restrict any activity protected under Section 7 of the NLRA. However, the administrative law judge (ALJ) found that the no-camera policy violated Section 8(a)(1) of the NLRA and invalidated the policy. The ALJ based his decision on Lutheran Heritage and determined that since employees would reasonably construe Boeing's no-camera rule to prohibit protected Section 7 activity, it was unlawful. Boeing filed exceptions challenging the ALJ's invalidation of its no-camera rule.

Outcome

The Board majority (Chairman Miscimarra, Member Kaplan, and Member Emanuel):
  • Overruled Lutheran Heritage and abandoned its "reasonably construe" test for evaluating facially neutral policies.
  • Established a new test for evaluating facially neutral policies that might interfere with an employee's exercise of NLRA rights, under which the Board will evaluate:
    • the nature and extent of any potential impact on NLRA rights; and
    • legitimate justifications for the employer's rule.
  • Reversed the ALJ's finding that Boeing violated Section 8(a)(1) of the NLRA, noting that Boeing's justifications for the rule outweighed the potential adverse impact on the exercise of Section 7 rights.
The Board recounted the standard adopted in Lutheran Village, in which the Board stated the following:
"[O]ur inquiry into whether the maintenance of a challenged rule is unlawful begins with the issue of whether the rule explicitly restricts activities protected by Section 7. If it does, we will find the rule unlawful. If the rule does not explicitly restrict activity protected by Section 7, the violation is dependent upon a showing of one of the following: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights."
(343 N.L.R.B. 646, 646-47 (2004)(emphasis added).)
The Board then noted that:
  • The Lutheran Heritage test was confusing and did not allow for the complexities of the real world (see William Beaumont Hospital, 363 N.L.R.B. No. 162 (2016)).
  • The test had a number of problems, including that:
    • the "reasonably construe" standard's consideration of NLRA-protected rights, without considering any legitimate justifications for the policies, rules, and provisions, is contrary to both US Supreme Court and Board precedent;
    • the Lutheran Heritage standard reflects the belief that unless employers correctly anticipate every potential overlap with NLRA coverage, employees are best served by not having employment policies, rules, or handbooks, which would disadvantage employees by denying them guidance on conduct and require employers to meet an extreme level of perfection;
    • Lutheran Heritage has often been applied to invalidate facially neutral work rules just because they were ambiguous, but this fails to recognize the many ambiguities that exist in other types of employment documents and in the NLRA itself;
    • the Lutheran Heritage "reasonably construe" test has improperly limited the Board's own discretion by casting every policy, rule, and handbook provision an employee might "reasonably construe" to prohibit any type of Section 7 activity as unlawful, and therefore improperly limiting the Board's discretion concerning the nuances of the Section 7 activity;
    • Lutheran Heritage has not allowed the Board to differentiate adequately between different industries or to consider the conclusion that justification for a rule might outweigh the potential future impact on NLRA-protected activity; and
    • the "reasonably construe" test has been difficult to apply and has yielded unpredictable results, creating challenges for the Board and courts and a considerable lack of certainty for employees, unions, and employers.
The Board therefore adopted a new standard, under which:
  • When 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:
    • the nature and extent of the potential impact on NLRA rights; and
    • legitimate justifications associated with the rule.
  • The Board will attempt to "strike the proper balance between . . . asserted business justifications and the invasion of employee rights in light of the Act and its policy," focusing on the employees' perspective, consistent with Section 8(a)(1) of the NLRA (NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 33-34 (1967); Lafayette Park Hotel, 326 N.L.R.B. 824, 825 (1998)).
  • In attempting to balance the rights of the employees and the justification of employers, the Board created three categories of employment policies, rules, and handbook provisions to which specific rules would fall based on the two-part evaluation test:
    • category one: rules that the Board deems lawful to maintain, because (i) the rule, when reasonably interpreted, does not prohibit or interfere with exercising NLRA rights; or (ii) justifications associated with the rule outweighs the potential adverse impact on protected rights (the Board emphasizes that this category contains two ways laws can be designated as lawful);
    • category two: rules that merit scrutiny on a case-by-case basis as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether legitimate justifications outweigh any adverse impact on NLRA-protected conduct; and
    • category three: rules that the Board designates as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and justifications associated with the rule do not outweigh the adverse impact on NLRA rights.
  • Even though an employer's maintenance of a rule may not be unlawful, an employee can still challenge the employer's application of the rule.
The Board also overruled:
In applying the newly adopted standard to the Boeing case, the Board found that:
  • The new rule will apply to Boeing and all other pending cases.
  • Boeing's no-camera rule:
    • was an integral part of its security protocols;
    • ensured that Boeing complied with federal regulations;
    • helped to prevent the disclosure of Boeing's proprietary information;
    • limited the risk that employees' personally identifiable information would be released; and
    • limited the risk of Boeing being targeted by terrorist attacks.
  • Boeing's no-camera rule had not allegedly interfered with any Section 7 rights. Any adverse impact of the no-camera rule on NLRA rights was minimal, and most of the rule's potential effects on employees did not relate to employees' concerted activity.
  • The justifications for Boeing's rule restricting the use of camera-enabled devices on its property outweighed the adverse effect that the no-camera rule would have on the exercise of employees' Section 7 rights.
Members Pearce and McFerran issued separate dissents, arguing that:

Practical Implications

Boeing is a decision with major implications for employers, as it provides them a broader ability to construct employment rules than they had under the Lutheran Heritage "reasonably construe" standard. Under Boeing, the Board has announced the implementation of a balancing test concerning each rule to determine whether employee rights or employer justification interests have more weight. The analysis will no longer focus only on how an employee may reasonably construe the rule, but will consider the employer's potentially legitimate reasons for maintaining that rule, as well as the external context and circumstances that appear in that particular case. Under this new standard, workplace rules that have legitimate business justifications are more likely to withstand scrutiny under the NLRA.
Employer rules endorsing civility and harmonious interactions with co-workers will no longer be invalidated simply because labor relations may involve discord. However, the NLRB will still scrutinize whether an employer applies these types of rules in a discriminatory manner to chill Section 7 activity. Employers therefore should continue to be prepared to show there are legitimate reasons for disciplining employees under these rules.

UPDATE

On August 2, 2023, a Board majority overruled Boeing and the subsequent work rules decisions applying the categorical classification system articulated therein and adopted a new burden-shifting standard for evaluating facial challenges to employer work rules that do not expressly restrict employees' protected concerted activity under Section 7 of the NLRA. Under the new analysis, the Board will find a challenged work rule presumptively unlawful under Section 8(a)(1) if the General Counsel proves that the rule has a reasonable tendency to chill employees in the exercise of their Section 7 rights, to be assessed based on the perspective of an economically dependent, layperson employee who contemplates engaging in protected activity and regardless of whether an alternative, noncoercive interpretation of the rule also is reasonable. However, the employer may rebut this presumption by showing that the rule advances a legitimate and substantial business interest that cannot be achieved by a more narrowly tailored rule. If the employer carries this burden, the rule will be found lawful to maintain. (Stericycle, Inc., 372 N.L.R.B. No. 113 (Aug. 2, 2023); for more information on this decision, see Article, The NLRB's New, Developing Standard for Assessing Lawfulness of Work Rules.)