“Let’s Keep It Between You and Me”: Not So Fast Says the NLRB

January 18, 2013

Employers have long tried to keep confidential certain aspects of the employee/employer relationship. For example, many employers do not want employees discussing their compensation packages with other employees and typically include such language in confidentiality agreements. In addition, during the course of periodic workplace investigations, employers typically request that employees being interviewed keep confidential the matters being discussed and further maintain the confidentiality of witness statements taken during the investigations. However, three recent decisions by the National Labor Relations Board (NLRB) make it clear that the NLRB is not in favor of confidentiality in the workplace.

First, a little back-drop: The National Labor Relations Act (NLRA) applies equally to non-union employers as it does to unionized employers and Section 7 of the Act protects employees’ “concerted, protected activity”. Essentially, employees are allowed to communicate with co-workers about the terms and conditions of employment. An employer’s attempt to hinder or interfere with those rights is a violation of the NLRA which could lead to an unfair labor practice charge being filed on the employees’ behalf by the NLRB. With that in mind, let us examine the three NLRB decisions.

Confidentiality and Non-Disparagement Agreements Must be Narrowly Drafted

The first decision involved Quicken Loans (a non-union employer) in a lawsuit that was originally brought by the employer against one of its former employees, Lydia Garza (a non-union employee) for violating the confidentiality and non-disparagement provisions of the parties’ employment agreement. Ms. Garza filed an unfair labor practice claim with the NLRB claiming that the two provisions violated the NLRA.

The confidentiality provision required employees to maintain as confidential: “non-public information relating to the Company’s business, personnel…all personnel lists, personal information of co-workers…personnel information such as home phone numbers, cell phone numbers, addresses and email addresses.”

The non-disparagement provision provided that employees could not “publicly criticize, ridicule, disparage or defame the Company or its products, services, [or] policies.”

The administrative law judge (ALJ) who ruled on Ms. Garza’s complaint found that “there can be no doubt that these restrictions would substantially hinder employees in the exercise of their Section 7 rights.” Specifically, the NLRB feels that this type of language is too broad because it could “chill” employees from engaging in protected activity such as making comments that the employer is “not treating employees fairly or paying them sufficiently.”  The end result of this was fairly tame: The ALJ ordered that the agreements be redrafted. But it still it threw a wrench into the works for the non-compete suit.

While this ruling will most certainly be appealed, it is likely that the NLRB will uphold the ALJ’s ruling. It will then probably be appealed to one of the appellate circuits which will likely overturn this, but in the meantime it would be wise to make sure that any confidentiality/non-disparagement agreements be carefully worded to avoid this type of result.

Confidentiality During Investigations

The second decision comes to us from a case in which an employee filed an internal whistle-blower complaint with his employer, Banner Health Systems. He alleged that he received instructions from his supervisor that he felt would endanger patients. An HR consultant, who received the complaint, instructed the employee not to discuss the matter with co-workers while it was being investigated. The NLRB found that this instruction violated the employee’s Section 7 rights. The Board found that while an employer could require its employees to maintain the confidentiality of an investigation, it must first determine whether that step is really necessary. To do this, the employer must look at whether the witnesses are in need of protection, whether there is a danger that evidence will be destroyed, whether testimony is in danger of being fabricated, and whether there is a need to prevent a cover-up.

So, the next time your company is faced with the task of conducting an internal investigation for harassment, discrimination, etc., it would be prudent for you to document the need for maintaining the confidentiality of the investigation following the factors above as an outline for your decision.

Witness Statements Not Always Protected as Confidential

The third decision involved a situation where a union was trying to obtain witness statements from the employer following the termination of an employee for sleeping on the job. The employer refused to provide the witness statements that were generated during its investigation, which were protected from disclosure under long standing Board precedent. The union filed an unfair labor practice charge to try and force the production of the statements.

The NLRB, which is the most liberal Board we have seen in many years, agreed with the union and found that the old Board precedent was “flawed.” Instead, it adopted a balancing test to determine if witness statements should be provided to the requesting party. That balancing test sets forth that if the requested information is relevant,  the party refusing to produce the information on the basis of confidentiality must prove “that a legitimate and substantial confidentiality interest exists, and that it outweighs the requesting party’s need for the information.”

This decision is yet another example of a pro-employee/pro-union Board. While this decision may be limited to a union’s request for statements, no longer may employers assert a blanket refusal to provide unions with witness statements used in internal investigations.  Instead, employers must now show that confidentiality concerns outweigh the requesting party’s need for the information.