Labor: Your “Please keep this quiet” demand may itself raise a ruckus

The NLRB casts a skeptical eye on certain confidentiality requirements in the workplace

Most employers are very conscious that the National Labor Relations Board (NLRB) will take an interest in them, if and when their employees try to organize or join a union. However, many employers are not as focused on what the National Labor Relations Act (NLRA) has to say about non-unionized employers. One such area receiving increasing attention, in some recent NLRB cases, is in relation to the issue of confidentiality in the workplace.  

The National Labor Relations Act, puts particular emphasis on protecting certain “concerted activities” among employees, regardless of whether the employer is unionized on not. Under the concept of “Section 7” concerted activity rights, the NLRA protects non-supervisory employees acting with or on behalf of other employees for their “mutual aid and protection,” particularly when employees are discussing the terms and conditions of their employment. Any employer, even a non-unionized employer, who interferes with a non-supervisory employee’s right to engage in such protected activities may face an NLRB charge and investigation. Thus, any employer, even a non-unionized employer, may run afoul of the NLRA when its agreements, policies or practices seek to impose an obligation of confidentiality over topics relating to the terms and conditions of employment. And, the board’s attention and recent case law is concerned not so much with employers who have actually infringed upon an individual employee’s rights in a particular case, as with the fact that the employer has a policy or practice that, in the board’s view, is likely to “chill” employees as they consider exercising their rights. It is the employer’s policy or practice that the NLRB may find is the operative violation of the NLRA.  

Three current areas stand out as presenting special risk for employers:

Maintaining confidentiality in pending internal investigations

First, employers frequently instruct employees not to discuss any ongoing internal investigation in which they are participating, on pain of adverse disciplinary action if the employee breaches confidentiality on such matters. There are obvious good reasons that may motivate employers to seek such confidentiality. Wronged or harassed employees may hesitate to bring a legitimate complaint forward unless they are assured that their complaint will be handled with some discretion. Likewise, if participants in an ongoing investigation freely discuss with other employees what they’ve been asked and what information they have supplied, the integrity of an investigation can quickly be compromised. And further, an employer may be dis-incented from conducting an investigation and righting a possible wrong if it is concerned that the investigation itself may set off a firestorm of harmful attention before the company can address the situation.

Nevertheless, employers are not free to impose blanket prohibitions on employees to prevent discussion of such matters. Thus, in the Banner Health System d/b/a Banner Estrella Medical Center and James A. Navarro matter, the NLRB ruled that a routine instruction directing employees who had made a complaint not to discuss the matter with coworkers while the investigation was ongoing violated the NLRA. The NLRB ruled this instruction violated the law because the company’s generalized concern with protecting the integrity of its investigations was not sufficient to automatically outweigh the employees’ right to engage in concerted activity. The opinion acknowledged that the circumstances of a particular incident may justify a requirement that employees not discuss an investigation but suggested that blanket prohibitions that dictate sanctions in the event of any disclosure violate the law. No bright line rule emerges from this opinion except that employers must tread carefully and “first determine whether,” in any given investigation, witnesses need protection, evidence is in danger of being destroyed or some other legitimate business justification exists in this particular instance to support such a restriction on disclosure. At least based on this opinion, it appears that the NLRB wants a case-by-case assessment of the need for confidentiality, rather than a “blanket” policy.  

Confidentiality on general information about personnel

A second problematic area is broad confidentiality or non-disclosure policies or agreements that restrict the sharing of basic identification and contact information about other employees. In a recent opinion from the NLRB, Quicken loans, Inc. and Lydia E Garza, the NLRB found that the employer violated the NLRA by using an employment agreement that defined proprietary confidential information as including “nonpublic information relating to or regarding… personnel,” “personnel information including, but not limited to, all personnel lists, rosters, personal information of coworkers” and “handbooks, personnel files, personnel information such as home phone numbers, sell phone numbers, addresses, and email addresses[.]” The NLRB reasoned that such restrictions would prohibit employees from discussing with each other the names, wages, benefits, addresses or telephone numbers of other employees, and that this would substantially hinder employees in the exercise of their Section 7 rights. Here the takeaway for employers is that confidentiality agreements used with non-supervisory employees need to be targeted on sensitive business information, but beware of casting too wide a net on prohibiting disclosure and discussion of other coworker information.

Confidentiality on compensation for highly paid professionals

A third, commonly related mistake made by employers is having a confidentiality policy (or a widely used confidentiality agreement) that prohibits non-supervisory employees from disclosing pay levels or bonuses with others. It is common for employers to seek to maintain compensation levels as confidential to avoid strife within the workplace and to minimize vulnerability for employee raiding. Many employers in particular assume that it is perfectly appropriate to instruct their more highly paid professional employees to keep their compensation levels confidential. However, in this regard, the NLRA does not make a distinction between so-called rank-and-file hourly employees and highly paid professionals (unless the latter are in supervisory positions or have an ownership interest in the business). Under the NLRA, all non-supervisory employees enjoy the right to engage in concerted activity and to discuss with others the terms and conditions of their employment. Consequently, employment agreements, employment policies or specific confidentiality agreements which restrict non-supervisory employees from disclosing their pay or other compensation elements to others clearly run afoul of the NLRA. Here the rule is relatively clear even if it runs against what many employers have in the past routinely assumed was appropriate.

In this way, as with its recent focus on social media policies and non-disparagement prohibitions, the NLRB is becoming increasingly active in policing non-union workplaces. Wise employers need to be thoughtful and more circumspect about such their non-disclosure restrictions if they want to avoid risking unwanted attention and NLRB enforcement actions, even in non-union settings.

Contributing Author

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Russ Sizemore

Russ Sizemore is a member of Moore & Van Allen PLLC’s Employment & Labor practice group.  He serves as an extended member of his clients’...

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