New Employer Friendly Standard for Evaluating Workplace Rules is Having an Impact

Nicholas Fortuna, February 8, 2018

On January 29, 2018, the United States Court of Appeals for the District of Columbia sent the appeal of The Daily Grill, a restaurant chain, back to the National Labor Relations Board (NLRB) for reconsideration of its decision that the chain’s workplace rules violated federal law.

In the matter of the Boeing Co., the NLRB established a new standard governing workplace rules and policies in December 2017. In that case, the employer, the Boeing Company had a rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and a company approved camera permit. Under the old standard, established in 2004 in the case of Lutheran Heritage, Boeing’s no-camera rule would have been unlawful. In Lutheran, the NLRB found that employers violated the National Labor Relations Act (NLRA) by maintaining workplace rules that would be “reasonably construed” by an employee to prohibit the exercise of NLRA rights.

In place of the Lutheran Heritage “reasonably construe” standard, the NLRB in the Boeing case established a balancing test for evaluating a facially neutral policy, rule or handbook provision. It will look at (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications for the rule. When legitimate justifications outweigh a rule’s potential impact on protected rights, it will be found lawful. Additionally, to provide clarity in this area, the Board provided three categories into which rules will be placed in future cases: (i) lawful (always valid); (ii) subject to case-by-case scrutiny (applying the Board’s balancing test to determine if the rule is lawful); and (iii) unlawful (the rule prohibits protected activity and is always unlawful).

The NLRB’s decision in The Boeing Co. strongly criticized the rational for the standard set in Lutheran Heritage. A majority of the NLRB pointed out that failing to consider the legitimate justifications associated with employer rules conflicts with U.S. Supreme Court rulings and the Board’s own precedents. Also, the troublesome standard of Lutheran Heritage provided that employer policies cannot be either too broad or simply stated because of a risk they might imply a restriction on protected activities. This strict standard which require an employer to consider all hypothetical permutations of protected activities concerning a given subject prior to implementation of workplace rules made managing the workplace unwieldy.

In The Daily Grill, the Board relied on the old Lutheran Heritage standard to find that the restaurant chain violated the NLRA. The Daily Grill proffered a number of workplace rules that were considered too broad and could be interpreted by employees as discouraging union activity. The rules included a “positive culture” rule that required employees to interact with management respectfully, a timekeeping rule that barred employees from loitering on the employer’s premises, and a rule governing relationships outside work. Now that the new Boeing Co. standard is being used, the DC Circuit Court of Appeals granted the NLRB’s request to send the case back for reevaluation.

The Boeing Co. standard radically changes the way the Board evaluates employer rules, including rules pertaining to conduct in and out of the workplace, such as use of social media. By balancing considerations favoring maintenance of rules, the new standard will expand the scope and type of rules the Board will find lawful and improve employers’ ability to tailor rules to suit their business needs.