In another of the increasingly frequent decisions by the National Labor Relations Board critical of employers’ policies and handbook provisions, a Board panel recently determined that the confidentiality rule included in an employer’s “Code of Business Conduct” was overly broad and restricted employees’ right to engage in concerted activities, a restriction in violation of Section 7 of the National Labor Relations Act (NLRA). Fresh & Easy Neighborhood Market, Case Nos. 31-CA-077074 and 080734 (July 31, 2014). 

After the United Food and Commercial Workers claimed that certain language in an employer’s confidentiality rule interfered with employees’ rights to engage in concerted activities for mutual benefit, an NLRB Regional Director issued a complaint against the company. An Administrative Law Judge (ALJ) found that the subject language did not constitute a prohibition on concerted protected activity and therefore did not violate the National Labor Relations Act (NLRA). The NLRB’s General Counsel filed exceptions to that decision, and a three-member panel was appointed to review the decision.  

The Board panel reviewed a provision entitled “CONFIDENTIALITY AND DATA PROTECTION,” which was one part of a more extensive Code of Business Conduct available to employees on the company’s website. The 20-page Code discusses a range of topics, including ethical considerations, equal employment opportunity, and unacceptable employee behavior.  

The section reviewed by the NLRB opens by stating that the company has “an important duty to our customers and our employees to respect the information we hold about them and ensure it is protected and handled responsibly.”  The section then goes on to list specific Do’s and Don’ts – including the following “Do”: 

  • Keep customer and employee information secure. Information must be used fairly, lawfully and only for the purpose for which it was obtained. 

The Board panel found that the company’s prohibition on sharing employee-related information was “not adequately limited by context” and that employees could reasonably believe that the company viewed information regarding the terms and conditions of employment as confidential and not to be shared. In spite of a strong dissent by one of the three panel members, the Board reversed the ALJ’s dismissal of the complaint and found that the challenged rule was unlawful. 

In the past year, the NLRB has criticized and struck down various handbook provisions including “at-will” disclaimers, social media policies, mandatory arbitration provisions, and requirements to keep internal investigations confidential. In each of those cases – as in this case – the Board required rescission, revision, or redrafting of the policies at issue and in addition, and required the affected employer to post at its facilities – nationwide, in this case – copies of a “Notice to Employees” that begins with the words: 

“The National Labor Relations board has found that we violated Federal labor law and has ordered us to post and obey this Notice.” 

The Notice, which is to remain posted for 60 consecutive days and also is to be distributed to employees electronically, goes on to say (in this format):

 FEDERAL LAW GIVES YOU THE RIGHT TO                                                                                             

             Form, join, or assist a union

            Choose representatives to bargain with us on your behalf

            Act together with other employees for your benefit and protection

            Choose not to engage in any of these protected activities.

 The Notice provides an Internet link to obtain the Board’s decision, and an address and phone number by which to do the same. As an indication that the Board is taking advantage of every available electronic resource, the Notice also includes a QR code which employees can use to obtain an immediate link to the decision in the matter on their smart phones.

 Most troublesome in this case is the footnote in which the Board states its finding that the company’s repudiation and revision of the questioned policy, which occurred prior to the actual complaint in this matter, was insufficient to overcome the policy’s illegality. In an attempt to resolve the matter prior to the complaint, the company had added a sentence to the rule to state that:

 “This policy does not limit nonsupervisory employees’ rights to engage in protected activities under the National Labor Relations Act, including the right to share information related to terms and conditions of employment.”

 According to the Board, the company’s action was insufficient, because:  “. . . the Respondent did not admit wrongdoing or assure employees that it would not further interfere with their Section 7 rights. In addition, because the Respondent waited over 2 years to revise the rule, and did so only 10 days before issuance of the complaint, its attempted repudiation was not timely.” 

This decision adds to the uncertainty that surrounds the Board’s decisions regarding handbooks and policies. The varying rationales used by the Board in its many recent decisions do not provide a specific methodology for employers that want to and are willing to deal with these issues. Some decisions provide specific language for a “savings clause” that a company may use to defend against NLRA violations, but other recent NLRB decisions are critical of the same or similar language. In this case, the Board did not criticize the language used by the company in its effort to repudiate and revise the policy – which is part of the goal of Board action in these cases – but instead, criticized the timing of the effort.

 Such inconsistency underscores the importance for employers to remain knowledgeable and up-to-date on this rapidly developing issue. As a first step, employers should carefully and objectively review handbooks and related company policies to assure that concerted activity is not precluded, either directly or by implication. Further, the mere presence of a “savings clause” may not be sufficient to protect the company from liability, if the clause is not clear, specific and proximate to the provision that it affects. In addition, and based on this case, efforts to repudiate or revise a policy should be done at the soonest time after learning of its possible violation of the NLRA.