Austin: Employer handbook guidance after Boeing decision

Austin

By Carita Austin

For most of the 2000s, the National Labor Relations Board(NLRB) reviewed facially neutral work rules under an employee-friendly standard, leaving companies worried that employees could construe neutral rules to interfere with protected activities under Section 7 of the National Labor Relations Act (NLRA). However, in December 2017, the NLRB overruled the employee-friendly standard and established a new balancing test in The Boeing Company, 365 NLRB No. 154 (Dec. 14, 2017), and created three categories of work rules. This change hit at Mach speed within its first year of taking off. However, as highlighted by recent administrative law judge decisions, questions remain about Boeing’s application.

NLRB’s pre-Boeing treatment of handbook rules

The NLRB has long recognized employer rights to maintain work rules for an orderly work environment while balancing them with employee rights to self-organization. See Republic Aviation Corp. v. NLRB, 324 U.S. 793, 797-98 (1945). But in 2004, the Board’s decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), created a two-part inquiry for reviewing facially neutral work rules that gave more weight to employee interpretations of rules. First, the board considered whether the rule explicitly restricted protected activity; if it did, then the rule was unlawful. Id. at 646. Second, if the rule did not explicitly restrict protected activity, then a violation was dependent upon showing one of three prongs: “(1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; (or) (3) the rule [had] been applied to restrict the exercise of Section 7 rights.” Id. at 647. Under this standard, the vast majority of violations for common workplace rules were found under the “reasonably construe” prong. Memorandum GC 15-04, “Report of the General Counsel Concerning Employer Rules” (March 18, 2015).

Boeing’s arrival with a new balancing test and categories

After NLRB leadership changes in 2017, the board overruled Lutheran Heritage’s “reasonably construe” prong and created a balancing test in Boeing that weighs two things: (1) the nature and extent of the potential impact on employee protected rights, and (2) an employer’s legitimate justifications for the rule. Boeing, supra note 1 at slip op. 3. At issue in Boeing was whether the company, which manufactures military and commercial aircraft and performs classified work, maintained a facially neutral policy restricting the use of camera-enabled devices. Id. at 1. Overruling Lutheran Heritage, the board found the rule lawful because the potential impact on employee rights was comparatively slight and outweighed by Boeing’s important justifications, including national security concerns. Id. at 5, 17.

Various “defects” in the old test included that it required unrealistic “linguistic precision” of employers, and it created “immense uncertainty and litigation for employees, unions and employers.” Id. at 3-4. The board sought to restore a meaningful balance to employee rights and employer interests that Lutheran Heritage failed to give. Id. at 5. The board also delineated three categories of rules. Id. at 3-4.

• The first category includes rules that are lawful to maintain, either because (1) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (2) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.

• The second category of rules includes those that warrant individualized scrutiny as to whether the rule prohibits or interferes with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.

• The third category of rules includes those that are unlawful to maintain because they prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule. Id.

NLRB general counsel’s guidance

About six months after Boeing, the NLRB’s General Counsel released a memorandum (GC Memo) providing further guidance. Memorandum GC 18-04, “Guidance on Handbook Rules Post-Boeing” (June 6, 2018) (hereinafter GC 18-04). The GC Memo identified Category 1 rules to include:

• Civility and disruptive behavior rules;

• No photography rules and no-recording rules;

• Rules against insubordination;

• Rules protecting confidential, propri-etary, and customer information or documents;

• Rules against defamation or misrepresentation;

• Rules against using employer logos or intellectual property, and;

• Rules banning disloyalty, nepotism or self-enrichment.

Meanwhile, Category 2 rules, which require evaluation on a case-by-case basis because the lawfulness of the rule is not clear, include:

• Broad conflict of interest rules;

• Broad confidentiality rules encompassing “employer business” or “employee information”;

• Rules prohibiting disparagement of the employer;

• Rules prohibiting the use of the employer’s name, and;

• Rules restricting employees from speaking to the media or third parties generally.

Finally, Category 3 rules, which are illegal to maintain because the impact on NLRA rights outweighs employer justifications, include:

• Rules prohibiting discussions of pay, benefits, discipline or other personnel actions with each other or third parties; and

• Rules prohibiting employees from joining outside organizations or voting on matters concerning the employer.

Recent application of Boeing

ALJ decisions applying the Boeing standard give us initial insights as to how the standard may evolve. In Nicholson Terminal & Dock Company, 07-CA-187907, 2018 WL 2263546 (May 16, 2018), an ALJ reviewed handbook rules under the Boeing standard: a rule prohibiting the use of cameras/recording equipment (lawful under Category 1) and a rule prohibiting outside work or moonlighting (unlawful under Category 3). The ALJ observed that Boeing did not define the categories as “creating ‘per se’ determinations, legal presumptions (rebuttable or otherwise), or evidentiary burden shifting.” Id. at slip op. 9. Rather, the ALJ interpreted the Boeing categories as indicating how the Board will address a type of rule in future cases, “absent a considerably distinct factual context.” Id. Accordingly, the ALJ read Boeing to require application of the balancing test in every case, even if the Board previously assigned a similar type of rule to one of the categories. Id.

In contrast, in Lowes Home Centers, LLC, 19-CA-191665, 2018 WL 1846016 (April 17, 2018), the ALJ found unlawful a rule prohibiting employees from unauthorized disclosure of confidential information including salary information under Category 3, even without the balancing test. Id. at slip op. 6, 7. The ALJ read Boeing “to designate any rule prohibiting employees from discussing salary information as per se unlawful thus bypassing the need to conduct a balancing test.” Id. at 7. But even when conducting the balancing test, the ALJ found the adverse impact on employees outweighed the employer’s asserted business justifications. Id. at 7-8.

As the Lowes and Nicholson decisions demonstrate, questions remain whether these categories should be considered “per se” designations or guidance as to how the Board will view rules, and whether the balancing test is necessary in every case.

Conclusion

Boeing provides predictability for common-sense rules that ensure civil workplaces, while the previous standard created uncertainty and an expectation of “linguistic precision” that is unrealistic in evolving workplaces. Despite that clarity, recent ALJ decisions show that the standard may evolve, and employers must carefully assess each rule at issue as there may be overlap between categories. And even if a rule is facially valid and lawful, it still matters why a rule is enacted and how it is applied.•

• Carita Austin is an associate in the labor and employment practice at Faegre Baker Daniels. Opinions expressed are those of the author.