ANALYSIS: Employers Face ULP Surge After Workplace Policy Ruling

Employers can expect to face a dramatic increase in the number of unfair labor practice charges in 2024, due to a recent National Labor Relations Board decision that provides employees with an easier path to challenge workplace policies—even those that have nothing to do with unions.

Unfair labor practice charges are already on the upswing amid the current resurgence of labor activity. But the NLRB’s Stericycle decision this past summer created a tough new standard under which the board will evaluate workplace policies, empowering employees to more easily prove that a policy violates their rights under Section 7 of the National Labor Relations Act. This decision will have wide-reaching impacts on employers in the years ahead, necessitating the auditing of policies and practices that used to pass NLRB muster under the board’s previous standard in Boeing.

The Stericycle decision, added to current conditions such as high levels of public support for unions, increased unionization efforts, and a board comprised of labor-friendly members, means that unionized and nonunion employers alike will enter 2024 unable to ignore the realities that the US labor movement presents for their operations, employee relations, and bottom lines.

ULPs, Already Rising, Will Continue to Climb

The overall number of ULP charges against employers is up, and that trend is likely to be magnified in the future. Through its first three quarters and part of its fourth, 2023 has already surpassed the full-year totals for 2020 and 2021—and it’s on track to have one of the highest in a decade.

A comparison of ULP charge totals from the NLRB in the first three years of the Obama and Biden administrations shows that, although the Obama board oversaw more ULPs per year, the Biden board experienced greater growth during its first three years. The Obama board actually saw a decline in during this period.

Beyond the mere filing of ULP charges, those found by regional directors to have merit—which, absent settlement, essentially results in an issuance of complaint and allows a charge to move forward to a hearing with an NLRB administrative law judge—are already more prevalent under the Biden board than they were during any year of the Obama board.

The NLRB’s annual Performance and Accountability data reports show that the percentage of ULP charges filed against employers that are found to have merit climbed to 41% in 2022—the highest percentage since 2006 (43%).

The NLRB’s statistics for meritorious ULP charges include those filed against unions as well as employers. But because the overwhelming majority of ULP charges filed are filed against employers, these figures do highlight the risks employers currently face.

What Stericycle Means for Workplace Policies

The NLRB’s August decision in Stericycle could open the floodgates for even more ULPs in 2024.

In the Stericycle decision, the NLRB overruled Boeing, a more employer-friendly standard put in place by the board under the Trump administration. It instead installed an augmented version of the standard before Boeing that the board set out in Lutheran Heritage Village-Livonia.

In Stericycle, the board built upon the Lutheran Heritage standard in two important ways. It clarified that the board will analyze a rule from the perspective of an employee who is “economically dependent on the employer” and who “contemplates engaging in protected concerted activity.” And it established that a rule will be presumptively unlawful if an employee from this perspective “could reasonably interpret” a facially neutral policy to restrict NLRA-protected activities.

This is the case even if a policy could also be reasonably interpreted to not restrict or prohibit these activities—marking a noteworthy departure from the Lutheran Heritage standard, which used “would” rather than “could” when it came to policy interpretation.

The new standard provides employers with a defense: They “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,” the NLRB wrote. Although this sounds like somewhat of a break for employers, it does not create an easy rebuttal argument unless each workplace policy is crafted and justified with Stericycle in mind.

The standard in Stericycle most likely boosts the odds of an increase in ULP charges related to workplace policies against employers and—at least in the short term, until employers respond by updating their policies to be narrower—an increase in those found to be meritorious.

All Employers—Even Nonunion Ones—at Risk

While nonunionized employers may think that the NLRB is less of a concern to them, this is not the case.

Section 7 rights are afforded to both unionized and nonunionized employees, and provide protections not just related to those supporting unions but to those engaging in concerted activities to improve and discuss working conditions and terms of employment.

This means that policies and procedures related to items like employee codes of conduct, conflicts of interest, social media use, confidentiality, solicitation and distribution, insubordination, and others have always been subject to Section 7, at least theoretically. But such policies are even more primed for challenges now, because the Stericycle standard makes it easier to argue that a policy is in violation of the NLRA—particularly when comparing the current standard to that of Lutheran Heritage or Boeing.

Risks of Stericycle Are Already Materializing

An unfair labor practice charge citing a workplace “civility policy” at Starbucks highlights the increased risks employers face under the new Stericycle standard.

In this ULP case, an NLRB ALJ in August ruled that Starbucks’s “How We Communicate” policy—a policy that states that employees “are expected to communicate with other partners and customers in a professional and respectful manner at all times” and that the “use of vulgar or profane language is not acceptable”—violated employees’ NLRA rights.

The ALJ reasoned that the policy was “overly broad, vague, and is susceptible to application against Section 7 activity,” specifically calling out how requiring “professional” and “respectful” communications could be interpreted to prohibit concerted activities that are protected under Section 7. The ALJ’s ruling, which ordered Starbucks to rescind the policy and inform employees that the former policy was illegal, can be appealed to the NLRB.

This decision, among others recently decided by NLRB judges and the full board itself, reminds employers that policies thought of as standard and legally sound in the pre-Stericycle era might not be as safe from legal challenges as once thought.

Access additional analyses from our Bloomberg Law 2024 series here, covering trends in Litigation, Transactions & Contracts, Artificial Intelligence, Regulatory & Compliance, and the Practice of Law.

Bloomberg Law subscribers can find related content on our Practical Guidance: Unfair Labor Practice (ULP) Charges and Practical Guidance: Union Recognition & Bargaining resources.

If you’re reading this on the Bloomberg Terminal, please run BLAW OUT <GO> in order to access the hyperlinked content, or click here to view the web version of this article.