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Rethinking confidentiality.(National Labor Relations Act)

Industrial Distribution July 1, 2009 | Mendelsohn, Fred By Fred Mendelsohn Beware of employment policies that violate the National Labor Relations Act A March 2009 opinion from the First Circuit Court of Appeals confirms that even non-union employers have significant exposure under the National Labor Relations Act for not only publishing a confidentiality policy (typically in an employee handbook), but also discharging an employee for violating the policy. In Northeastern Land Services v. NLRB, the court extended the law, finding a confidentiality provision in an employment agreement illegal.

Section 7 of the Act guarantees employees the right to form, join or assist unions, or to engage in other concerted activities for their mutual aid and protection (such as union organizing efforts). A violation of the Act is enforced through the filing of an unfair labor practice (ULP) charge with the National Labor Relations Board. One violation of Section 7 is a restriction of an employee’s right to discuss wages or other terms of employment. Northeastern Land Services, like many non-union employers, required employees to sign an agreement that says the “employee . . . understands that the terms of this employment, including compensation, are confidential to Employee and [NLS]. Disclosure of these terms to other parties may constitute grounds for dismissal.” NLS fired one of its employees for discussing with an NLS customer the failure by NLS to pay wages and expense reimbursements in a timely manner. Upholding the NLRB, the First Circuit upheld a ULP finding and rescinded the confidentiality provision, ordered NLS to notify its employees of the decision, reinstated the discharged employee and awarded the employee full back pay (including benefits). The ruling follows other fairly recent NLRB precedent that found the mere publication of employment policies-such as non-fraternization, non-disclosure, confidentiality and no-access policies-violate Section 7 of the Act, where they prevent employees from exercising their rights and/or can be reasonably construed to prohibit Section 7 activity (such as the discussion of wages and so on). The NLRB has found that these types of policies violate the Act, even where the (1) language did not explicitly prohibit Section 7 activity, (2) policy was not understood by employees to restrict Section 7 rights, and (3) the employer never applied the policy in a restrictive fashion. nationallaborrelationsact.org national labor relations act go to website national labor relations act

In light of Northeastern Land Services v. NLRB (and given what seems to be an increasingly charged union organizing environment), distributors should:

Draft employment policies and/or agreements that balance protecting a company’s legitimate business interests (such as trade secrets and proprietary information) without restricting employees’ rights to discuss their wages, hours and other terms of employment;

Define confidential information in narrow ways, remove any restrictions on Section 7 rights and consider a savings clause to clarify that such rights are not subject to any improper restriction; and Ensure that other employment practice statements do not run afoul of the Act or Equal Employment Opportunity Commission protections on reporting or discussing EEOC incidents.

Fred Mendelsohn is a partner with Burke, Warren, MacKay & Serritella P.C. in Chicago. For more information on this topic, contact Fred at (312) 840-7004 or fmendelsohn@burkelaw.com .

Mendelsohn, Fred