On December 14, 2017, the National Labor Relations Board (NLRB or Board) voted to overturn its 2004 decision in Lutheran Heritage Village-Livonia (Lutheran Heritage), which established a standard for evaluating the legality of employer handbook policies that has been used in recent years to invalidate a wide range of common workplace rules. The 3-2 decision, in a case involving The Boeing Co., was issued on the same day that the Board’s new Republican majority also voted to invalidate the controversial joint employer standard established in Browning-Ferris Industries, heralding a new era at the NLRB under President Trump.
Under Lutheran Heritage, facially-neutral policies and work rules were deemed unlawful if employees could reasonably construe them as prohibiting protected, concerted activities under Section 7 of the National Labor Relations Act (the NLRA or Act). In 2014, an administrative law judge (ALJ) applied that standard to invalidate Boeing’s “no camera” policy, which the company maintained to ensure the security of its facilities and to fulfill its federally-mandated duty to protect the export-controlled and classified information it handles in its work for the federal government.
In overturning the ALJ’s decision, the Board held that the Lutheran Heritage standard, “[t]hough well-intentioned,” was unworkable because it required a one-size-fits-all analysis that prevented the Board from giving any consideration to the legitimate justifications for “and real-world complexities associated with many employment policies.” Because a policy could be found unlawful simply due to ambiguities as to the scope of the conduct it prohibited, the Board also found that Lutheran Heritage unreasonably required employers to anticipate every possible conflict with NLRA-protected activities and draft new policies and rules with “linguistic precision.”
The decision went on to state that this was particularly unfair given that the Board itself has struggled to consistently apply the Lutheran Heritage standard, leading to arbitrary and inconsistent results that have produced “rampant confusion for employers, employees and unions.” The majority provided the example of a work rule prohibiting “abusive or profane language” that was found to be lawful in one case, whereas a work rule prohibiting “loud, abusive, or foul language” was found to be unlawful in another. The majority also noted that the standard has been applied with such “zeal” that the Board has invalidated “a large number of common-sense rules and requirements that most people would reasonably expect every employer to maintain.”
As a result, the Board announced a new rule that is intended to provide greater clarity and consistency in its application than the Lutheran Heritage standard. Moving forward and in cases that are currently pending, the Board will analyze facially-neutral handbook policies and work rules by comparing the nature and extent of the potential impact on employee rights under the NLRA, and the employer’s legitimate justifications associated with the relevant policy. The Board stated that the new analysis will result in three categories of employment policies, rules, and handbook provisions:
- Category I will include rules that the Board deems lawful because the rule either (i) does not prohibit or interfere with the exercise of NLRA rights when reasonably interpreted; or (ii) the potential adverse impact on protected rights is outweighed by the justifications associated with the rule. The Board placed “no-camera” requirements like Boeing’s rule and rules requiring employees to abide by basic standards of civility in this category.
- Category II will include rules that require an individualized analysis in each case to determine whether the rule would impact NLRA rights and, if so, whether the impact is outweighed by a legitimate justification.
- Category III will include rules that the Board deems unlawful because they restrict protected conduct and the adverse impact on employee rights is not outweighed by any legitimate justification. The Board placed rules prohibiting employees from discussing wages or benefits in this category.
Employers are likely to greet the decision in the Boeing case as a welcome departure from an era in which work rules that most people would find to be an employer’s prerogative were invalidated by an overzealous Board. The decision is also likely to reduce the pressure employers feel when drafting new policies and the concern that an imperfectly worded rule could result in costly litigation and legal liability. Although the case may be appealed to the courts, it is likely to be affirmed if it ultimately finds its way to the current Supreme Court.