July 26, 2018

NLRB Issues Guidance on New Employer-Friendly Standard for Handbook Rules

By Alexis P. Theriault and Catherine M. DiVita

In early June, the National Labor Relations Board (the “NLRB”) issued Guidance on Handbook Rules Post-Boeing regarding how regional offices should apply its new standard for analyzing employee handbook rules (the “Guidance”). The standard, announced in The Boeing Co., 365 NLRB No. 154 (Dec. 14, 2017), sets forth a balancing approach that is more friendly to employers.

Under the old standard, a “facially neutral” rule (that is, a rule that is not worded to interfere intentionally with workers’ rights to organize or engage in “protected concerted activity” regarding the terms and conditions of their employment) was unlawful if it could be “reasonably interpreted” to restrict activity protected by the National Labor Relations Act (the “NLRA”). Now, the NLRB will balance a rule’s negative impact on the employees’ ability to exercise their NLRA-protected rights and the employer’s right to maintain discipline and productivity in its workplace. When applying this balancing test, the NLRB will take a restricted view of the rule at issue and no longer will interpret generalized rules to ban all activity that conceivably could be included. Significant to employers with cases pending before the NLRB, the new standard will be applied retroactively.

The Guidance

In Boeing and the Guidance, the NLRB outlined three categories of rules: (1) rules that are generally lawful to maintain; (2) rules warranting individualized scrutiny; and (3) rules that are plainly unlawful to maintain. The Guidance provides additional information about each category, including examples and a discussion of factors its regional offices should consider.

Category 1 Rules

Category 1 Rules are generally lawful either because they do not prohibit or interfere with NLRA-protected rights or the employer’s business reasons for the rule outweigh the potential adverse impact on those rights.

Examples of these rules include so-called “civility” rules that require employees not to be rude, discourteous or disparaging to their co-workers; rules that prohibit employees from photographing worksites or recording conversations, phone calls, or company images without advance approval; rules that prohibit insubordination, unlawful or improper conduct, uncooperative behavior, disruptive behavior, or other on-the-job conduct that adversely affects the employer’s operations; and rules prohibiting the discussion and/or disclosure of confidential, proprietary, or customer information. For more information about the nature and quality of these Category 1 Rules, the Guidance discusses them and the basis for their lawfulness at length.

Employers should note that even if having these types of rules is lawful, the NLRB will not treat as lawful the use of these rules to prohibit NLRA-protected concerted activity or to discipline employees engaged in such activity.

Category 2 Rules

Category 2 Rules are not obviously lawful or unlawful. As a result, these rules must be evaluated on a case-by-case basis to determine if the rule would prohibit or interfere with NLRA-protected rights, and if so, whether the employer’s justification for the rule outweighs that adverse impact. This case-by-case analysis requires examining the context of the rule, which includes interpreting the rule as it relates to other rules, the examples the employer provides for how the rule will be applied, the type and character of the workplace, and whether evidence exists that a rule actually has caused employees to refrain from NLRA-protected concerted activity.

Examples of these rules include broad conflict-of-interest rules that do not specifically target fraud or exploiting one’s position with the employer for personal gain and which do not restrict membership in, or voting for, a union; broad confidentiality rules regarding “employer business”; broad confidentiality rules regarding “employee information” generally; and rules generally prohibiting disparagement or criticism of the employer. Further examples of these Category 2 Rules and how they compare to Category 1 and Category 3 Rules are discussed in the Guidance.

Category 3 Rules

Category 3 Rules are rules the NLRB has designated as unlawful because they prohibit or limit NLRA-protected concerted activity and the adverse impact on the NLRA-protected rights is not outweighed by the employer’s justifications for the rule.

Examples of these rules include rules expressly prohibiting employees from disclosing salaries or other information pertaining to their wages, commissions, performance, and the contents of their employment contracts; rules expressly prohibiting employees from discussing their working conditions or other terms of their employment; rules prohibiting employees from disclosing to the media information regarding their employment and their working conditions; and rules regulating memberships in outside organizations (such as unions or employee committees), including rules prohibiting discussing or voting on matters concerning the employer.

It should be no surprise to employers that these rules, which strike at the heart of the protections afforded by the NLRA, would be deemed unlawful. Employers who seek to impose such rules to protect legitimate interests should consider carefully whether there is a narrower rule that will protect the same interest without infringing on NLRA-protected rights.

Massachusetts employers also should note that under the Amended Massachusetts Equal Pay Act no employer may prohibit its employees from discussing their wages. If such a policy exists, the employer may be subject to direct suit by its employees on an individual or class-wide basis. Employers interested in learning more about the MEPA should review our tips for complying with the Act, our discussion of the Act, and our discussion of the Massachusetts Attorney General’s Office’s formal guidance regarding the Act.

Preparing Lawful Handbook Rules

The Guidance should be at the top of any employer’s reading list when evaluating its Employee Handbook, rules, and policies. Employers should keep in mind that the NLRA applies to most private-sector employers, and not only employers with unionized workforces.

Although the Guidance is employer-friendly, employers should not view it as a blank check to create workplace rules that infringe on its employees’ NLRA-protected rights. The balancing approach set forth in Boeing and discussed in the Guidance applies only to facially neutral rules. Rules that specifically ban NLRA-protected activities or are applied to discipline employees engaged in such activities remain unlawful.

Unless and until all possible rules are categorized, the key question regarding any rule will involve how to predict whether the rule falls into Categories 1, 2, or 3. The Guidance takes a big step toward explaining how the NLRB’s regional offices will categorize common workplace rules, and employers should become familiar with the Guidance and its helpful illustrations of the policies it categorized.

Employers with questions about whether their handbooks, rules, and policies are lawful should contact one of Conn Kavanaugh’s experienced employment lawyers.