Confidentiality Policy that Would Prohibit Employees From Discussing Wages Found Unlawful

This article appeared in the Winter/Spring 2013 issue of “Virginia Human Resources Today” magazine.

Your CEO tells you that she wants a strong “confidentiality” policy in the Employee Handbook. You update your Company’s policy intending to safeguard the Company’s “confidential” information. But, here’s the catch — if your policy as written would lead an employee to believe that he is not free to discuss his wages or working conditions with coworkers or outsiders, the NLRB will likely conclude it is unlawful! In Flex Frac Logistics, LLC, 358 NLRB No.127 (Sept. 11, 2012), a non-union company had all employees sign an agreement that included the following language:

Employees . . . 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; [our] 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. . . No employee is permitted to share this Confidential Information outside the organization. . . . Disclosure of Confidential Information could lead to termination. (emphasis added).

Employees have the right under Section 7 of the National Labor Relations Act (the “Act”) to engage in “protected, concerted activity” concerning their terms and conditions of employment. An employer violates the Act when it “maintains a work rule that reasonably can chill employees in the exercise of their Section 7 rights.” In Flex Frac, the Board majority opined as follows:

The Board has repeatedly held that nondisclosure rules with very similar language are unlawfully overbroad because employees would reasonably believe that they are prohibited from discussing wages or other terms and conditions of employment with non-employees, such as union representatives – an activity protected by Section 7 of the Act.” 358 NLRB No. 127 (Sept. 11, 2012). The Board found that even though the majority of the items were properly designated as confidential, the context of the overall confidentiality rule did nothing to “remove employees’ reasonable impression that they would face termination if they were to discuss their wages with anyone outside the company.”

PRACTICE POINT: Confidentiality or non-disclosure policies must be drafted with precision. Employees cannot be prohibited from discussing or disclosing their own personal employment terms (including their wages or benefits) to coworkers or even outsiders.

Policies that Prohibit Negative or Adverse Comments Also under Scrutiny.

In Costco Wholesale Corp., 358 NLRB No. 106 (Sept. 7, 2012), the employer had a social media policy that prohibited employees from, among other things, making statements that “damage the Company, defame any individual or damage any person’s reputation.” The NLRB found this policy overbroad and unlawful because employees could reasonably conclude that the rule required them to refrain from engaging in certain protected communications–those that may be critical of the employer or its agents. In contrast, the NLRB noted that it has upheld rules that proscribe conduct that is malicious, abusive or unlawful.

PRACTICE POINT: On May 30, 2012, the NLRB AGC issued its third report concerning social media guidance relating to employer policies. This memo is referred to as OM 12-59 and can be found on the NLRB website. Near the end of the memo, the AGC analyzed Wal-Mart’s recently revised social media policy and concluded that it was lawful in its entirety. It also attached the policy to its guidance. It is important that an employer carefully draft a social media policy tailored to its company so that employees know the rules regarding their use of social media. As the NLRB has recently issued 3 separate advice memos and decided cases such as Costco, it is clear that this is a topic of keen interest to the agency. It is best to have your policy approved by your labor counsel.

Firing for Employee Comments on Facebook Found Unlawful.

Consider the following facts: An employee, Lydia, has been openly critical of the job performance of several of her coworkers including Marianna. One Saturday morning, Marianna posted the following message on her personal Facebook page:

Lydia, a coworker, feels that we don’t help our clients enough. . . I about had it! My fellow coworkers how do u feel?

Four other coworkers added comments to the Facebook posting in which they “generally objected to the assertion that their work performance was substandard.” Lydia also saw the Facebook postings and posted her own reply: “stop with ur lies about me.” She then complained to the Executive Director and showed her the Facebook postings. The Company fired Marianna and the other four coworkers for “bullying and harassment” of Lydia in alleged violation of the Company’s “zero tolerance” policy.

Based on these facts, the NLRB decided that the terminations were unlawful. Hispanics United of Buffalo, Inc., 359 NLRB No. 37 (Dec. 14, 2012). The Board majority found that there was “no question” the employees were engaged in concerted activity that was for the “purpose of mutual aid or protection.” The Board found that the postings were “concerted” because the workers were “taking a first step towards group action to defend themselves” in anticipation that Lydia would eventually take her criticism to management.

PRACTICE POINT: This decision arising in the Facebook/social media context confirms that the Board analyses comments posted on Facebook in the same manner as it analyzes verbal comments made by employees on the shop floor, at work or in the community. There will likely be much more litigation in this area.

Conclusion

As these recent decisions show, the Labor Board has shown unprecedented interest in challenging employment policies that have been in effect for decades. It is expected that this trend will continue for the foreseeable future. Enlightened employers are best advised to seek legal guidance from their labor counsel to ensure that their policies comply with Section 7, and also before taking disciplinary action against an employee for a violation of such a policy.