NLRB Shifts Standard for Deciding If Employee Handbook Rules Are Lawful

For thirteen years, many employers creating policy handbooks for employees had to keep a very tricky question in mind: How could they create reasonable rules for workplace conduct without making it seem like they were trying to interfere with employees’ rights under federal labor law? 

In 2004, the National Labor Relations Board ruled in Lutheran Heritage that if a workplace rule published in an official handbook could be interpreted as interfering with employee rights protected under Section 7 of the National Labor Relations Act, it would be deemed unlawful. 

This rule caused much consternation among employers trying to craft appropriate rules for the workplace, until the Lutheran Heritage standard was overturned by the board in December 2017 (with a different slate of members) in The Boeing Co.

While the effects of this decision have yet to be fully realized, it is expected that more workplace rules published in employer handbooks will be upheld as lawful under the NLRA. 

Wisdom of Lutheran Heritage Criticized

The board’s Boeing decision broadly criticized not just the rationale, but also the wisdom of Lutheran Heritage, according to Frederick Miner, a shareholder and Labor Management Relations Practice Group core member with management-side law firm Little Mendelson in Phoenix. 

“As the majority in The Boeing Co. pointed out, failing to consider the legitimate justifications associated with employer rules prevented the board from balancing their impact on employee rights and reaching sensible decisions,” Miner said. 

Miner also said the Boeing decision highlighted an important contradiction in the Lutheran Heritage standard. On the one hand, the broad, simple language of Section 7 confers protected rights on employees, enabling them to engage in “concerted activities” for their “mutual aid and protection” without employer interference or reprisal. On the other hand, Lutheran Heritage presupposes that employer policies cannot be either broad or simply stated because of the risk they somehow might imply a restriction on protected activities.

“This contradiction creates an unattainable standard under which all hypothetical protected activities concerning a given subject must be correctly anticipated, identified, and assiduously carved out in order to prevent ambiguity and produce a lawful rule,” Miner said. “The Boeing Co. extensively details how Lutheran Heritage created inconsistent, confusing results that discouraged the maintenance of rules, with the foreseeable result that employers and employees were deprived of rules that benefit the workplace.”

Disclaimers Don’t Protect

Even if employers went to the trouble of including a provision specifically stating that no rule was to be interpreted or enforced in a way that would interfere with Section 7 rights, it’s been the very rare case where a disclaimer has been found sufficient to cure an otherwise overly broad rule or handbook provision. According to Miner, the board generally has taken the position that employees cannot be expected to understand nuances of the act and know that a rule is improper and need not be followed.

The board reasoned that an effective savings clause must: (1) broadly refer to “the full panoply of rights protected by Section 7”; (2) be expressly referenced in, or at least placed very close to the handbook policies it purports to inform; and (3) there must not be any alleged unfair labor practice activity that contradicts the clause (First Transit, Inc., 360 NLRB 619 (2014)).

“Under The Boeing Co. standard, I would expect the board to take a different and much more practical approach toward disclaimers,” Miner said, adding that the new standard will not prevent the NLRB from finding unlawful the application of an otherwise lawful policy to restrict Section 7 rights. “The issue will not be solely whether the board would expect employees to construe the policy a certain way, but whether the rule reasonably restricts Section 7 rights despite the existence of the disclaimer.”

What is ‘Reasonable’?

The question then becomes one of defining the “reasonableness” standard: What, exactly, is the definition of “reasonable” in this situation? 

Under its new standard, when the board reviews a facially neutral rule in order to determine whether it unlawfully interferes with employees’ protected rights, it will evaluate both (1) the nature and extent of the potential impact on employee rights; and (2) legitimate justifications associated with the rule.  

According to Miner, the standard avoids speculation about how reasonable employees would view a rule and instead asks how rules should reasonably be interpreted.

“Keep in mind The Boeing Co. rule applies to the mere maintenance of otherwise neutral employer policies,” Miner stated. “For instance, implementing an otherwise lawful no-solicitation policy during a union organizing campaign would be an application that restricts organizational rights that the NLRB would continue to find unlawful.”  

He expects this change in the board’s language to reflect a reaffirmation of the principle in Lutheran Heritage that when reviewing a challenged rule, the board should “give the rule a reasonable reading,” in that it will “refrain from reading particular phrases in isolation” and “not presume improper interference with employee rights” (343 NLRB at 647).

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