The National Labor Relations Board (“Board”) has established in Stericycle Inc., and Teamsters Local 628, 372 NLRB No. 113 (2023) (“Stericycle”) a ne

Stericycle Inc., and Teamsters Local 628, 372 NLRB No. 113 (2023), august 2, 2023 Decision and Order Remanding. Cases 04– CA–137660, 04–CA–145466, 04–CA–158277, and 04–CA–160621

Overview of the decision.

The National Labor Relations Board? (“Board”) has established in Stericycle Inc., and Teamsters Local 628, 372 NLRB No. 113 (2023) (“Stericycle”) a new standard to determine if a work rule that does not expressly restrict the right of employees to participate in concerted activity under Section 7 of the National Labor Relations Act (“NLRA”) is facially unlawful under Section 8(a)(1) of the Act. Section 7 protects “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.” Under Section 8(a)(1), it is an unfair labor practice for employers “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the NLRA.

Before Stericycle the Board? had decided that several types of work rules were lawful for employers to maintain, essentially without regard to how the rule or rules in question were drafted. See? Board in Boeing Co., 365 NLRB No. 154 (2017) (“Boing”), as clarified in LA Specialty Produce Co and Teamsters Local 70, International Brotherhood of Teamsters, 368 NLRB No. 93 (2019) (“LA Specialty”).

In Stericycle, Administrative Law Judge Michael A. Rosas found that the Respondent violated Section 8(a)(1) of the NLRA by maintaining certain rules for its employees that addressed personal conduct, conflicts of interest, and confidentiality of harassment complaints. In making his findings, the judge applied a standard that was established by a divided Board? in Boeing Co., 365 NLRB No. 154 (2017), which Board? “sua sponte” reversed a standard set out seventeen years before, in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004) (“Lutheran Heritage”) .?

In Stericycle the Board? has decided to adopt an approach to assessing facial challenges to employer work rules under Section 8(a)(1) of the NLRA that builds on and revises the standard set out in the Lutheran Heritage standard. The Board explained that:

….we have decided to adopt an approach to assessing facial challenges to employer work rules under Section 8(a)(1) that builds on and revises the Lutheran Heritage standard. As we will explain, the primary problem with the standard from Boeing and LA Specialty Produce is that it permits employers to adopt overbroad work rules that chill employees’ exercise of their rights under Section 7 of the Act, which include the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively . . . , and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.

In Stericycle the Board says that employer’s? rules must be looked at from the perspective of an employee that “…is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity” and what was the employer’s interests “actually invoked to justify them.”?? “[T]he employer’s intent in maintaining a rule is immaterial.”?

Stericycle further explains that employers may rebut the presumption that a rule is unlawful if they can prove that the rule “advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule.”

In Stericycle the Board? states that it agrees with prior decisions to the effect that? the General Counsel must prove that a challenged rule has a “reasonable tendency to chill employees from exercising their Section 7 rights.? The Board adds that the rule must be looked at from the perspective of an employee who is subject to the rule, economically dependent on the employer, and who also contemplates engaging in protected concerted activity and? what is looked at is? “if an employee could reasonably interpret the rule to have a coercive meaning”. (Emphasis ours). Also, “the employer’s intent in maintaining a rule is immaterial”.

The Board specifically says that it overrules “Boeing, LA Specialty Produce[1] , and the work rules cases relying on them, including those that placed rules into an “always lawful” category based simply on their subject matter…”.

The Board also rejected the approach in Boing that was based on certain categories and returns to “…a particularized analysis of specific rules, their language, and the employer interests actually invoked to justify them.”

?The new burden of proof? is as follows:

1.???????? The General Counsel must show that the rule can be reasonably interpreted as having a coercive meaning (that the personal conduct rule “…could be understood to prohibit employees from engaging in activities protected under Section 7 of the Act”)[2] .? “…[I]f an employee could reasonably interpret the rule to have a coercive meaning, the General Counsel will carry her burden”, “even if a contrary, noncoercive interpretation of the rule is also reasonable.” (Emphasis is ours.)?

This does not mean that a rule will be found presumptively unlawful if a coercive interpretation is “merely conceivable (as opposed to reasonable)”.? The Board? will not require that the coercive interpretation of a rule be the only reasonable interpretation, but it will apply the norm that ambiguity of the rule? will? be construed against the employer.

2.???????? If the General Counsel meets this initial burden is to show that the rule can be reasonably interpreted to have a coercive meaning. Then the employer must “rebut that presumption by proving that the rule advances a legitimate and substantial business interest, and that the employer is unable to advance that interest with a more narrowly tailored rule.”

We note that the Board? refers to the? decision in LRB v. Gissel Packing Co., 395 U.S. 575 (1969) and its statement? that “an employer’s rights cannot outweigh the equal rights of the employees to associate freely, as those rights are embodied in § 7 and protected by § 8(a)(1).” Id. at 617. The? Supreme Court held that “any balancing of those rights must take into account the economic dependence of the employees on their employers, and the necessary tendency of the former, because of that relationship, to pick up intended implications of the latter that might be more readily dismissed by a more disinterested ear.” Id. Thus, “…in interpreting a rule, the Board will take the perspective of the “economically dependent employee” who contemplates engaging in Section 7 activity.” Id.

The bottom line is that employers must show when they have a rule that may reasonably be interpreted as having a coercive meaning,? that they have a legitimate and substantial business interest in having the rule and the rule has written it in a narrowly tailored manner. This means that if? the General Counsel meets her burden, then at this stage employers must show that they cannot advance the legitimate? and substantial business interest which they have set out for the rule, though a more narrowly tailored rule.

The following is a brief analysis of the 52-page Decision and Order in Stericycle.

The Policies in question and? Board’s holdings.

Among others, Stericycle had the following rules or policies which were at issue in the case:

A.??????? Camera and Video Use Policy which provided as follows:

3.1 Team members are prohibited from taking pictures with a personal or company- issued camera or cell phone camera of any Stericycle property, operation, or equipment without the permission of their supervisor/manager.

4.1 Team members are prohibited from taking video or audio recordings with a personal or company camera, camcorder, or other device of any Stericycle property, operation, or equipment without the permission of their supervisor/manager.

The General Counsel argued that this policy prohibited “…employees from taking pictures, or video or audio recordings with personal or company-issued mobile phones, cameras, camcorders or other devices of any company property, operation, or equipment without the permission of their supervisor/manager” and Stericycle argued that this policy had narrowly drawn restrictions in order to protect its legitimate business interests, specifically, protecting its physical equipment, property, proprietary information? and processes.? The Board? found that: “A reasonable interpretation of the policy conveys the sense that the policy totally prohibits the use of cameras, video and audio recording devices on company property.”? Moreover, the policy was found to be too broad, and Stericycle did not present evidence that an overriding proprietary interest in this ban on camera and recording devices.? Finally, the Board? held that Stericycle the not submit sufficient evidence to show why it could not make an exception for Section 7 activity in the policy.

B.??????? “Personal Conduct” work rule at page 30 in of its Team Member Handbook which provided that:

In order to protect everyone’s rights and safety, it is the Company’s policy to implement certain rules and regulations regarding your behavior as a team member. Conduct that maliciously harms or intends to harm the business reputation of Stericycle will not be tolerated. You are expected to conduct yourself and behave in a manner conducive to efficient operations. Failure to conduct yourself in an appropriate manner can lead to corrective action up to and including termination. . . . Engaging in behavior that is harmful to Stericycle’s reputation.

The complaint alleged that the Company did not provide a copy of the Code of Conduct and the harassment training to the Union. Stericycle also allegedly refused to provide a copy of the training video to the Union because it was “proprietary”. It later conceded that the video was a relevant Union request.? The Board? held that this refusal to provide the Code of Conduct and harassment training video requested by the Union violated Section 8(a)(5) and (1) of the Act.

C.??????? Conflict of Interest work rule at page 33 of its Team Member Handbook which set out that:

Stericycle will not retain a team member who directly or indirectly engages in an activity that constitutes a conflict of interest or adversely reflects upon the integrity of the Company of its management.

The Board held that the conflict-of-interest work rule “…could be understood to prohibit employees from engaging in activities protected under Section 7 of the Act”.

D.??????? Retaliation” work rule at page 10 of its Team Member Handbook which states that:

All parties involved in the investigation will keep complaints and the terms of their resolution confidential to the fullest extent practicable.

This policy was also found to violate the Act because it “….could be understood to prohibit employees from engaging in activities protected under Section 7 of the Act”.

E.??????? Electronic Communications Policy.

Stericycle also had an Electronic Communications Policy that the General Counsel argued had a portion which unlawfully restricted employees’ usage of the Company’s email system in violation of Section 8(a)(1) of the Act and? Stericycle argued that the language as issue “does not explicitly restrict Section 7 activity, has not been applied to restrict Section 7 activity, and cannot be reasonably construed to restrict Section 7 activity.”? The Board? also held that the personal conduct rule “…could be understood to prohibit employees from engaging in activities protected under Section 7 of the Act”.? The Board states that when an employer has a legitimate interest in the safety of its operations and hazardous conditions such as existed at Stericycle’s operation, the rule is valid.? It explained that:

The Company’s maintenance of its policy manual rule regarding the use of personal electronics in the workplace policy and employee handbook policy regarding the use of personal electronics do not explicitly restrict Section 7 activity, are narrowly tailored to restrict the use of mobile phones and electronic devices in the Company’s hazardous work areas, and any impact on Section 7 activity is outweighed by the Company’s substantial business justification for the rules.

F. ??????? Personal Electronics Policy

Stericycle’s use of Personal Electronics in the Workplace Policy provided in part as follows:

Section 5.1 Team members, visitors and vendors are prohibited from using personal mobile phones or other personal electronic devices such as MP3 players, (i.e. iPods) in waste processing, warehouse, loading and unloading areas during operating hours, and any area subject to vehicle movement at any time.

Section 5.3 Personal phone calls and use of personal electronic devices shall be restricted to meal and break periods.

Section 5.5 Violation of this policy may result in disciplinary action up to and including termination.

This policy, as with the Electronic Communications Policy, was found not to explicitly restrict Section 7 and was narrowly tailored by Stericycle to meet its need to protect employees who work in hazardous areas.

Summary of legal background for the decision.

In? LA Specialty the Board set out certain points of clarification with regards to three categories of rules which were set out in Boing.? The Board said that:??

First it is the General Counsel’s initial burden in all cases to prove that a facially neutral rule would in context be interpreted by a reasonable employee, as defined above, to potentially interfere with the exercise of Section 7 rights.3 If that burden is not met, then there is no need for the Board to take the next step in Boeing of addressing any general or specific legitimate interests justifying the rule.

When referring to the interpretation mentioned in the cited sentences, the Board is talking about three categories of employer rules that were set out in Boing. The second point of clarification is:

Second, if the General Counsel meets the initial burden of proving that a reasonable employee would interpret a rule to potentially interfere with the exercise of Section 7 rights, the Boeing analysis will require a balancing of that potential interference against the legitimate justifications associated with the rule.

The third point is as follows:

Third, in some instances, it will not be possible to draw any broad conclusions about the legality of a particular rule because the context of the rule and the competing rights and interests involved are specific to that rule and that employer.

The Board?? in Stericycle says that “the primary problem with the standard from Boeing and LA Specialty Produce is that it permits employers to adopt overbroad work rules that chill employees’ exercise of their rights under Section 7 of the Act, which include the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively . . . , and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157.”

The Board?? states that the existing standard failed? to account for the “economic dependency of employees on their employers.”? According to the Board:

1.???????? “[E]mployees are? typically (and understandably) anxious to avoid discharge or discipline, they are reasonably inclined both to construe an ambiguous work rule to prohibit statutorily protected activities and to avoid the risk of violating the rule by engaging in such activity.”

2.???????? “….Boeing gives too little weight to the burden a work rule could impose on employees’ Section 7 rights.” It finds that the Boing test? gives ”… too much weight to employer interests.”

3.???????? “Boeing also condones overbroad work rules by not requiring the party drafting the work rules—the employer—to narrowly tailor its rules to only promote its legitimate and substantial business interests while avoiding burdening employee rights.”

Thus, the Board?? has adopted in Stericycle the existing rule that “overbroad workplace rules and polices may chill employees in the exercise of their Section 7 rights”.? It explained that after the Board’s decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004) (“Lutheran Heritage”) had set a standard in place which “….reviewing courts repeatedly and controversially applied and upheld the standard.”

The Board? in Stericycle Inc points out that the:

Lutheran Heritage implicitly allowed the Board to evaluate employer interests when considering whether a particular rule was unlawfully overbroad, the standard itself did not clearly address how employer interests factored into the Board’s analysis.

Since the Lutheran Heritage decision did not clearly address this issue, the Board? adopts a standard that:

….makes explicit that an employer can rebut the presumption that a rule is unlawful by proving that it advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule.” (Emphasis ours)

Under this standard, there must be “a particularized analysis of specific rules, their language, and the employer interests actually invoked to justify them.”

Regarding this, the Board? in Stericycle says that the standard set out in? Lutheran Heritage, requires and it agrees with this standard, that the General Counsel must prove that a challenged rule has a “reasonable tendency to chill employees from exercising their Section 7 rights.”? This rule must be looked at from the perspective of an employee that “is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity.” “[T]he employer’s intent in maintaining a rule is immaterial.” The burden of proof? shifts as follows:

1.???????? The General Counsel must show that the rule can be reasonably interpreted as having a coercive meaning.??? “…[I]f an employee could reasonably interpret the rule to have a coercive meaning, the General Counsel will carry her burden, even if a contrary, noncoercive interpretation of the rule is also reasonable.” (Emphasis is ours.)? This does not mean that a rule will be found presumptively unlawful if a coercive interpretation is “merely conceivable (as opposed to reasonable)”.? The Board? will not require that the coercive interpretation of a rule be the only reasonable interpretation, but it will apply the norm that ambiguity of the rule? will? be construed against the employer.

2.???????? If the General Counsel meets this initial burden is to show that the rule can be reasonably interpreted to have a coercive meaning. Then the employer must “rebut that presumption by proving that the rule advances a legitimate and substantial business interest, and that the employer is unable to advance that interest with a more narrowly tailored rule.”

This new burden-shifting method will be applied on a case-by-case basis.

The Board? clarifies that this burden of proof framework only applies “… to facial challenges to the? maintenance of work rules that do not expressly apply to employees’ protected concerted activity.” The Board’s decision does not change nor is it intended to apply to the existing law regarding the analysis of “….whether maintenance of a work rule will be deemed unlawful when it explicitly restricts Sec. 7 activity or was promulgated in response to union or other protected concerted activity.”

The dissent points out that:

[A]n overbroad rule can always be narrowed. Given as much, how will an employer prove that it is unable to advance its legitimate and substantial interest or interests with a more narrowly tailored rule? Would an employer have to show that it maintains the current rule because a prior narrower rule failed adequately to advance the relevant interest or interests? Would it suffice for an employer to introduce evidence that it considered (but did not actually implement) a narrower rule and rejected it as unlikely to advance the relevant interest or interests? What if the Board finds a rule unlawful, the employer narrows it, and the narrowed rule fails adequately to advance the relevant interest or interests. Now that the original rule has been shown to be the narrowest possible rule, may the employer reinstate it, even though doing so would seemingly defy the Board’s prior decision?

The decision in Stericycle is especially difficult to implement in Puerto Rico, which is not an employment at will jurisdiction and where employers have the burden of proving “just cause” to fire someone or else pay a statutory severance.? Article 2 of the local wrongful termination statute, Law Number 80? of May 30, 1976, Title 29 Laws of Puerto Rico Annotated § 185b (“Act 80”), provides that just cause is one “…that which is not based on legally prohibited reasons and on a whim of the employer” but rather due to “reasons that affect the proper and regular operations of an establishment”.? Article 2 provides the following examples of “just cause”:

?(a) ???? That the employee engages in a pattern of improper or disorderly conduct.

?(b) ???? That the employee engages in a pattern of deficient, inefficient, unsatisfactory, poor, slow or negligent performance. This includes noncompliance with the employers’ quality and safety rules and standards, low productivity, lack of competence or ability to perform the work at reasonable levels as required by the employer and repeated complaints from the employer’s customers.

?(c) ???? The employee’s repeated violations of the reasonable rules and regulations established for the operation of the establishment, provided, that a written copy thereof has been timely furnished to the employee.

?(d) ???? Full, temporary, or partial closing of the operations of the establishment.

In those cases, in which the employer has more than one office, factory, branch or plant, the full, temporary, or partial closing of operations of any of these establishments where the discharged employee works shall constitute just cause for discharge pursuant to this section.

?(e) ???? Technological or reorganization changes as well as changes of style, design, or the nature of the product made or handled by the establishment, and changes in the services rendered to the public.

?(f) ????? Downsizing made necessary by a reduction in the foreseen or prevailing volume of production, sales, or profits at the time of the discharge or for the purpose of increasing the establishment’s competitiveness or productivity.

?Article 14 of Act 80, Title 29 Laws of Puerto Rico Annotated § 185n? includes the following definitions:

(a) Misconduct.—? An employee’s willful violation of the employer’s rules or standards that are not contrary to the law; unlawful or immoral acts; or actions or omissions that adversely and significantly affect the legitimate interests of the employer or the wellbeing of others, which violation is premeditated, deliberate, or in disregard of the adverse consequences thereof.

(b) Disorderly conduct.—? An employee’s willful violation involving breach of the peace, tranquility, good order, and respect that must prevail in a healthy work environment.

Reviewing subsections, a), b) and c), one can consider that the manual needs to have clearer rules to avoid the risk? of a successful claim that the language is vague and can be reasonably construed as prohibiting Section 7 activity.? For example, is? termination of employment if an employee incurs in a “pattern of improper or disorderly conduct” overbroad?? What is “improper”??

What about the definition of “disorderly conduct” set out in the preceding paragraph?? Similarly with the word “respect”,? it seems that this would not be reasonably construed to prohibit Section 7 activity because it is limited to the interest in having a “healthy work environment”, but does it need an explanation in the employee manual?

Puerto Rico also has an antiretaliation statute and a rule or policy created by an employer pursuant to the law is probably valid, but this needs to be confirmed.

Puerto Rico case Law, Vega Rodríguez v. Telefónica de PR, 2002 TSPR 50 and Vega-Rodríguez v. Puerto Rico Telephone Company, 110 F. 3d 174 (1st Cir. 1997) sets out the requirements for employers to have valid electronic surveillance rules and? procedures,? which need to be reviewed due to the language of Stericycle.

?Thus, it is important that employee manuals, rules and regulations for Puerto Rico employers be revised.

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[1] Boing set out three categories: Category 1 included rules that were considered lawful because they neither interfered with nor adversely impacted an employee’s Section 7 rights; Category 2 included rules that warranted “individualized scrutiny” to determine whether they interfered with or adversely impacted an employee’s Section 7 rights; and Category 3 included rules that the NLRB designated as unlawful because they interfered with or adversely impacted an employee’s Section 7 rights.

[2] Office of Public Affair of the NLRB says that:? “Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful.”

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