Coincidence 2: this article about how confidentiality requirements cannot prohibit employees to discuss their compensation (contrary to what management sometimes says or writes)

From the same the employerologist blog devoted to HR questions this post centered on the limits to confidentiality requirements. Does that ring a bell?

It’s No Secret…The NLRB On Confidentiality Requirements at Work

Meet Careful Colleen, the HR Director for Exceptional Enterprises. When Colleen started at Exceptional about five years ago, she made sure to implement policies requiring employees to preserve confidentiality of personnel and financial information as well as information provided in workplace investigations. Why? Exceptional doesn’t want profits, costs, salaries, benefits, promotions etc. to be common knowledge.  Nor does it want the risk of evidence tampering or employee intimidation during investigations. Now however, Careful Colleen is also concerned. Why? While such policies  are often cornerstones in employment policies, they, along with other long-established protocols can land an employer in hot water with the increasingly far-reaching NLRB. Join The Emplawyerologist after the jump to find out why… 

We’ve talked about confidentiality here, here and here in the context of employment agreements and post-employment behavior. We have also talked about restrictive covenants, and related confidentiality provisions, designed to protect trade secrets and intellectual property. (Click here, here and here for review).  Clearly such policies are aimed at and necessary for protecting legitimate interests. Why then is the NLRB getting involved? What’s the problem?

While I may be starting to sound like a broken record in this area (and hopefully I amonly starting) it all hinges on Section 7 of the NLRA, which affords employees 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”, and the right to “refrain from any or all such activities.” One more repetition: the NLRA applies to both union and non-union workplaces.

Most recently–exactly one month ago, in fact — the 5th Circuit Court of Appeals upheld the NLRB’s finding that a company’s confidentiality policy violated Section 7 and was an unfair labor practice under Section 8(a)(1) of the NLRA, in Flex Frac Logistics, LLC v. NLRB No. 12-60752 (5th Circuit March 24, 2014).  The employer, a non-union trucking company in Forth Worth, Texas in 2010  terminated an employee, who then filed an NLRB unfair labor practice charge, based on the following confidentiality clause included in a document that Flex Frac required all its employees to sign:

Employees deal with and have access to information that must stay within the Organization.                               Confidential information includes, but is not limited to, information that is related to: our customers, suppliers, distributors; Silver Eagle Logistics LLC organization management and marketing processes, plans and ideas, processes and plans, our financial information, including costs, prices; current and future business plans, our computer and software systems and processes; personnel information and documents, and our logos, and art work. No employee is permitted to share this Confidential Information outside the organization, or to remove or make copies of any Silver Eagle Logistics LLC records, reports or documents in any form, without prior management approval. Disclosure of Confidential Information could lead to termination, as well as other possible legal action.

While this confidentiality clause did not explicitly prohibit activity allowed under Section 7,  the Court held that  the prohibition against divulging or discussing “our financial information, including costs”, could include wages, which in turn is an aspect of working conditions. The Court also noted that the clause did not indicate that  “some personnel information, such as wages, is not included “. Accordingly, the clause could reasonably be construed by employees as interfering with Section 7 rights.

What are some takeaways from this case? First, you cannot prohibit employees from discussing their wages. Second, you must make sure that confidentiality provisions cannot reasonably be construed as containing such a prohibition. If you really want to be sure, add language specifically stating that certain information, such as salary or wages is not included in the confidentiality clause.  How employees actuallyconstrue such provisions does not matter. The issue is, whether the provision could reasonably be construed as interfering with an employee’s rights under Section 7.

What about workplace investigations? Aren’t employers allowed to protect the integrity of their workplace investigations? Yes, absolutely!  The problem is with blanket policies that are not carefully tailored so that they can address the specific situation. The most recent, and publicized NLRB decision on this issue, Banner Health System,  articulated the following circumstances under which confidentiality requirements might be appropriate: a) witnesses need protection; b) danger that evidence might be tampered with; c) danger that testimony may be fabricated; or d) need to prevent a cover-up. It is not enough, of course, for an employer to merely assert one or more of these justifications. As with all things legal  or potentially legal, there must be evidence tending to prove one or more of those circumstances.

A few months later, the Board released an Advice Memorandum provided sample language from an employer’s confidential investigation policy that it struck down. Here is the offending clause:

[Employer] has a compelling interest in protecting the integrity of its investigations. In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. To assist [Employer] in achieving these objectives, we must maintain the investigation and our role in it to strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

The last two sentences, in bold print, are the problem, according to the NLRB, because the rule “does not take into account the employer’s burden to show in each particular situation that the employer has a business justification for confidentiality that outweighs Section 7 rights”.  Here is the alternative language to those two sentences that the NLRB says would be lawful:

“[Employer] may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If [Employer] reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.”

See the difference?  What are the takeaways here? First, no blanket policies! You can tell your employees in advance that if you determine a need for confidentiality, then the employees must follow your confidentiality rules. You must then determine, be able to demonstrate and then document the need for confidentiality on a case by case basis.

That’s all fine and well, but what’s up with the NLRB and social media? Come back next week for that topic.