Your Employee Handbook and the National Labor Relations Act
We have been on quite the roller coaster as to new regulations in 2023! Fresh on the heels of the information we shared regarding the new Form I-9, E-Verify, permissible remote inspection of Form I-9’s, the Federal Trade Commission’s incredibly ambitious attempt to ban the enforcement of non-competition agreements nationwide (that we are waiting on any date), the Department of Labor’s decision to authorize indefinite intermittent leave under the Family and Medical Leave Act, the impending updates from the Department of Labor regarding the salary basis threshold test and the independent contractor test, the National Labor Relations Board (“NLRB”) – not to be outdone – has just set its regulatory sights on employee handbooks. Brace yourselves, because this one is going to be rough.
Before we get to the “what,” we first need to opine on the “why:” American politics is a pendulum, swinging back and forth between Democrat and Republican priorities as predictably as the tides. Each change in party brings a new administration, and with it, new party-friendly candidates are appointed to positions of power within the various administrative agencies that make and (attempt to) enforce new rules pursuant to the scope of their agency, i.e., the Environmental Protection Agency (“EPA”) makes new rules for oil drilling, the Federal Communications Commission (“FCC”) makes new rules for internet and cable providers, the NLRB makes new rules for unions and the ability of employees to organize, even in the absence of any current union presence in place at that particular employer.
It seems that each time the control of these agencies shifts from one party to the next, the very first thing the new regime does is attempt to un-do any gains made which advanced the previous party’s administration’s agenda. When the NLRB was officially brought under Republican control in 2017, employee-friendly policies put into place by the prior Democratic Administration were replaced by more employer-friendly policies. Now that the current Administration’s appointees have a majority within the NLRB, the NLRB has been hard at work re-implementing the previous employee-friendly policies. To that end, earlier this year the NLRB announced that certain formerly routine provisions of settlement and general release agreements were likely unenforceable, most notably non-disparagement and confidentiality clauses for non-management employees.
Legal scholars assumed this would be the most dramatic thing the NLRB would pull off prior to the next election cycle, but as of August 3, 2023, the NLRB upped the ante even further, declaring that any clause in an employee handbook which might have a “reasonable tendency to chill employees from exercising their rights” was presumptively unlawful. In practical terms, that means that policies pertaining to social media, audio/video recording, cell phone use (including cameras), personal conduct, conflicts of interest, and confidentiality of harassment/discrimination/retaliation complaints/investigation are now at serious risk of being declared overbroad per se when an employer attempts to enforce them. Under the old standard, policies pertaining to issues like these were considered categorically lawful, even where they might be construed to restrict employee speech; under the new standard, no such exceptions apply.
Let’s pause for a second to address what we’re certain you are all thinking: my workplace doesn’t have a union, so what do I care what the NLRB has to say? Well, believe it or not, the NLRB’s jurisdiction extends to all stages on unionization, including pre-unionization, which includes any business whose employees might, at some indeterminate point in the future, desire to unionize, which includes a full 99% of all business in America – even in Florida! – including yours. In fact, you’ve been complying with the NLRB’s various rules and regulations this entire time, whether you knew it or not. For instance, the NLRB is reason why you can’t prohibit employees from disclosing their wages, and why you cannot monitor employee break rooms and other “private” areas in your workplace, among other miscellaneous requirements you’ve probably never thought twice about.
It is also worth noting that the NLRB has a national office headquartered in Tampa, just four (4) miles from the DOL’s Tampa office, and barely half (.5) a mile from the Equal Employment Opportunity Commission (“EEOC”), so in light of the NLRB’s newfound crusade to make itself relevant in notoriously union-hostile Florida, we fully expect the NLRB to actively attempt to insert itself into – and be happy to respond to – any employee complaints regarding handbook language that a disgruntled employee will surely be all too happy to share with the NLRB. Disgruntled former employees taking a scorched-Earth approach to get back at their employer have a new weapon to wield.
Suffice to say, any person or entity in America that employs more than a single employee falls under the governance of the NLRB, and must accordingly abide by their regulations, the latest of which is to prohibit any restrictions upon employee-speech which might hypothetically interfere with an employee’s right to engage in collective action at some indeterminant point in the future, even if such policies further other legitimate goals that have nothing to do with unionization, such as protecting witnesses during a workplace investigation, or protecting your business’ confidential information from unlawful disclosure. Such policies are now only enforceable to the extent that they advance a “legitimate and substantial business interest,” and that the employer cannot advance such interest with a more narrowly tailored rule. While this does provide a glimmer of hope, bear in mind that under this new standard, any restrictions upon employee speech whatsoever will be declared presumptively unlawful by the NLRB, meaning that the burden will shift to the employer to prove that such restrictions aren’t unlawful, not the other way around; think of this as the opposite of the “innocent until proven guilty” standard applied under criminal law.
The NLRB articulated the new standard as such: “In sum, going forward, the Board will begin its analysis by assessing whether the General Counsel has established that a challenged work rule has a reasonable tendency to chill employees from exercising their Section 7 rights… If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that it is unable to advance that interest with a more narrowly tailored rule.” If this language initially seems reassuring, allow us to rephrase: the NLRB’s new standard is effectively “well, why couldn’t you have said it like this…?” The NLRB’s lone dissenting voice pointed out this problem as well, observing that “[I]t is virtually impossible to craft work rules that are general enough to serve their intended lawful purpose without being susceptible to an interpretation that infringes on [National Labor Relations Act] rights.”
To drive that point home, let’s underline some of the principles the NLRB highlighted throughout its published “decision”:
A facially-neutral work rule is presumed to be unlawful where the NLRB General Counsel makes a showing that it has a reasonable tendency to chill employees’ exercise of their [National Labor Relations Act] rights.
Whether the rule has a “tendency” to be “chilling” will be viewed from the perspective of an employee who is predisposed to engaging in protected concerted activity, not any other regular employee.
The employer’s intention in maintaining a rule is immaterial.
To the extent the rule is ambiguous, the rule will be interpreted against the drafter – who is always the employer in the case of an employee handbook.
To illustrate just how far the NLRB is willing to take these principles, we are providing an analysis of the decision from which this new direction arose: Stericycle, Inc., 372 NLRB No. 113 (August 2, 2023). This case concerned an employee handbook issued in 2015 which contained a clause restricting employees’ use of cell phones during work hours. So far, so good, right? There’s likely not a single person reading this whose workplace doesn’t have some version of this policy. The Court, for their part, agreed, and struck down an employee’s challenge to this rule more or less out of hand, stating that any potential impact on collective action this rule might have been outweighed by the employer’s desire to ensure employees did not use their cell phones in hazardous work areas. The NLRB General Counsel, however, remained unconvinced, and appealed the Administrative Law Judge’s ruling directly to the NLRB itself. Long story short, eight (8) years later, the NLRB ultimately sided with it’s own General Counsel (surprise!), declared that restricting employees’ cell phone use to designated break times was a violation of the National Labor Relations Act, and issued the new standard we are describing in this article to you now.
Let that sink in for a moment: the NLRB declared that, pursuant to this new standard, employers do not appear to be allowed to restrict employees’ cell phone use in the workplace. This was not a hypothetical thought experiment or a law-school exam question; This was an administrative ruling with the full force of the NLBR’s enforcement arm behind it. Remember, this case reflects enforcement by the NLRB against a private employer, thus an enforceable legal precedent has been created - that’s how far the NLRB is willing to take this new holding. Oh, and did we mention that this ruling is retroactive? Well, it is, according to the NLRB, which means that even policies that you’ve had in place for years are susceptible to legal challenge, with all the appertaining penalties, costs, and fees.
This is normally where we would try to provide our clients with reassurance and urge you not to panic. Unfortunately, in this case, Florida employers may very well have cause to panic, at least a bit. If employers aren’t allowed to restrict employees’ use of cell phones in the workplace, what other routine workplace policies and procedures are next on the chopping block?
This is not an esoteric legal technicality that will only impact employers of a certain size, or within a certain industry; this is a dramatic, sweeping change that will impact every employer with an employee handbook. Let’s illustrate by way of a hypothetical scenario: let’s say you have an employee who makes an allegation of sexual harassment against a supervisor. Your employee handbook certainly has a policy declaring that both the complaint itself and the terms of the complaint’s resolution should remain confidential due to morale, reputation concerns, and general business procedures. As of August 3, 2023, that good, common-sense policy would not survive scrutiny by the NLRB, because – per the NLRB – what if the complaining employee desired to resolve their complaint via collective action with coworkers who may have experienced similar harassment, or what if the employee was not satisfied with the results of the investigation or your proposed resolution, and wanted to protest via collective action?
Insofar as the NLRB is concerned, these rights are so sacrosanct that they trump concerns regarding reporting hierarchies, confidentiality, possible trade secret-protected information, workplace gossip, the integrity of and safety of the participants in workplace investigations, coworker and customer privacy, and a litany of other legitimate workplace issues.
Now that we’ve raised the alarm, and made it clear just how far-reaching the NLRB’s latest action really is, we can focus on the obvious next question: what now? Well, first and foremost, the Sensenig Law Firm is already hard at work re-evaluating our employee handbook policies to bring them in line with the NLRB’s new standard. Some of these policies have proven tried-and-true since as far back as the previous NLRB standard was implemented in 2017, so the NLRB’s new standards are already proving extremely disruptive on our end, which is nothing compared to the impact they will have on your business moving forward. It is no exaggeration to say that, at the very least, employers will need to review and likely overhaul several handbook policies.
As you read this, we’re scrambling to create new standard policies that we can incorporate into your existing employee handbooks governing the policies that literally every employer requires, and that we know for sure will be impacted by the NLRB’s latest ruling, i.e., harassment and discrimination reporting and investigation procedures, confidentiality and trade secret policies, cell phone policies, anti-gossip policies, bulletin board policies, etc., etc., etc. But as to policies and procedures specific to your personal business needs, generic plug-and-play templates just aren’t going to cut it. If you’ve been putting off a thorough, line-by-line review of your employee handbook, now is the time to set yourself up for success in the coming years and start reviewing your handbook. Remember, the last NLRB standard was in place from 2017 – 2023, so we can expect this new standard to have a lifespan of a similar time period of six (6) plus years, and possibly longer, depending on how the next major national election cycle plays out.
We do wish this wasn’t such a “the sky is falling” educational article, but the recent action by the NLRB is truly significant and we wanted our valued clients to have an understanding as to this update so that our clients can consider starting an internal review of their handbooks to see where potential concerns may lie. The Sensenig Law Firm is here to help in any way that we can.