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NLRB Overturns Obama Board Decision on Workplace Policies

December 26, 2017

Related articleNew NLRB General Counsel’s Revolutionary Reversal of Direction

On December 14, 2017, in a 3-2 decision in Boeing Company, 365 NLRB No. 154, the National Labor Relations Board (NLRB) overruled its decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004) and established a new standard the NLRB will apply in determining whether an employer’s facially neutral workplace rules, including employee handbook provisions, unlawfully interfere with the exercise of rights protected by the National Labor Relations Act (NLRA). The NLRB then applied the new standard and determined that Boeing did not violate the NLRA by maintaining a rule prohibiting employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit.

This important decision significantly enhances the flexibility of employers in adopting workplace policies and all employers should take this opportunity to review their policies to ensure that they can take full advantage of the NLRB’s newly adopted standard.

The New Standard

In Lutheran Heritage, the Board held that employers violated the NLRA by maintaining workplace rules and policies that, although facially neutral, could be “reasonably construed” by an employee to prohibit the exercise of NLRA rights. The new standard, however, will take account of employer interests underlying a challenged rule as well. That is, the NLRB will evaluate policies by balancing an employer’s justification for a facially neutral rule or policy against the potential that the rule or policy will interfere with activity protected by the NLRA. Under this new test, the Board will consider two things: “(i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”   The Board also stated that it would apply this test “retroactively to the instant case and to all other pending cases.”

Application to Other Workplace Rules

In addition to the specific no-camera rule at issue in Boeing, the NLRB also stated that it was overruling certain prior NLRB decisions where the analysis was conducted under Lutheran Heritage and led to results that would be inconsistent with the Boeing decision’s balance of employer and employee interests. Going forward, employers may lawfully maintain rules which require employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace. The Board noted, however, that even rules found lawful under this new test could lead to a violation of the NLRA if the rules are applied in a manner that actually discriminates against activity protected by the NLRA.

Categories for Future Board Review

In addition to creating the new standard of review, the NLRB in Boeing divided workplace rules and policies into three categories, which it described as a “classification of results.” Rules and policies should fall under one of the three categories. The categories are:

• Category 1, which will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. Examples of Category 1 rules are the no-camera requirement maintained by Boeing at issue in that case, and rules requiring employees to foster “harmonious interactions and relationships” or abide by basic standards of civility.

• Category 2, which will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.

• Category 3, which will include rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.  An example would be a rule that prohibits employees from discussing wages or benefits with one another, which prohibits employees from revealing their own salary to a co-worker, or which prohibits asking about other employees’ compensation.

What Are Legitimate Employer Justifications?

With regard to no-camera rules, it is important to note that the NLRB did not hold that all rules prohibiting cameras in the workplace are lawful; it found that the no-camera rule at issue in Boeing was lawful because the company’s legitimate business justifications for maintaining its rule outweighed any potential impact on NLRA rights.[1] Some of these justifications were particular to Boeing’s status as a federal defense contractor. For example, the NLRB noted that the no-camera rule was “an integral component of Boeing’s security protocols, which are necessary to maintain Boeing’s accreditation as a federal contractor to perform classified work for the United States Government.”

The Board also pointed to other legitimate justifications for Boeing’s no-camera rule that potentially have a more general application to other types of companies. These include:

(i) “prevent[ing] the disclosure of Boeing’s proprietary information,” defined as “any nonpublic information that has potential economic value to Boeing,” such as “manufacturing methods and processes” and “material usage”;

(ii) “limit[ing] the risk that employees’ personally identifiable information will be released,” such as a picture of an employee’s security badge, which could be used to create a counterfeit badge; and

(iii) “limit[ing] the risk of Boeing becoming a target of terrorist attack” if photographs revealed “vulnerabilities” such as “gaps in the fence line,” “key utility entry points,” “gas lines, hazardous chemical pipelines, [and] electrical substations.”

In addition, the NLRB provided two other examples of other employer interests that may justify no-camera rules in other contexts. The Board reiterated its holding in Flagstaff Medical Center, 357 NLRB 659 (2011), that the no-camera rule at issue in that case was lawful “because the rule’s maintenance was supported by substantial patient confidentiality interests, and any potential impact on Sec. 7 rights was comparatively slight.” The NLRB also specifically overruled its decision in Caesar’s Entertainment d/b/a Rio All- Suites Hotel & Casino, 362 NLRB No. 190, slip op. at 3–5 (2015), that a no-camera rule was unlawful, stating that it agreed with dissenting Board Member Johnson that the NLRB majority had, in that decision, “failed to give appropriate weight to the casino operator’s interests in ‘safeguarding guest privacy and the integrity of the Respondent’s gaming operations.’” Id., slip op. at 5 fn. 12.

Next Steps

While the Boeing case involved a no-camera rule, the real significance of the decision will be in its application to other employer policies. Under the Lutheran Heritage standard, the NLRB had previously found various types of common work rules and policies unlawful, such as those regulating employee conduct relating to confidentiality, interaction with the media and other third parties, and use of company logos, copyrights and trademarks. In light of the new Boeing balancing test, employers should now consider whether their existing rules should be modified to take fuller account of articulable employer interests that justify the rule. Because not all decisions that applied the Lutheran Heritage standard were overruled, however, determining with certainty what modifications can be made will have to await the NLRB’s analysis of those rules under this new standard.

In future articles we will report on whether, and how, the NLRB has revised its holdings with respect to these types of rules.

Please do not hesitate to contact any of our attorneys if you have any questions.

[1] Boeing’s policy stated, in pertinent part “possession” of “camera-enabled devices” (including cell phones) was “permitted on all company property and locations, except as restricted by government regulation, contract requirements or by increased local security requirements,” but the “use of these devices to capture images or video is prohibited without a valid business need and an approved Camera Permit that has been reviewed and approved by Security.” The rule defined a “business need” as “a determination made by the authorizing manager that images or video are needed for a contractual requirement, training, technical manuals, advertising, technical analysis, or other purpose that provides a positive benefit to the company.”