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 (Act) for not only publishing a confidentiality policy (typically in an employee handbook), but also discharging an employee for his violation of 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 (like 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 (NLRB). One violation of Section 7 is a restriction of an employee’s right to discuss wages or other terms and conditions of employment. Northeastern Land Services (NLS), like many non-union employers, required its employees to sign an employment agreement that provided that the “[e]mployee … 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 timely pay wages and expense reimbursements. Upholding the NLRB (in an otherwise controversial opinion as only two of five NLRB members presided over the case), the First Circuit upheld a ULP finding, and rescinded the confidentiality provision, ordered NLS to notify its employees of the decision, reinstated the discharged employee, and awarded the employee full back pay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 finding that the mere publication of employment policies — like non-fraternization, non-disclosure, confidentiality and no-access policies — violate Section 7 of the Act where they chill employees in the exercise of their rights and/or can be reasonably construed to prohibit Section 7 activity (like the discussion of wages, etc.). The NLRB has found these types of policies violative of 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) employer never applied the policy in a restrictive fashion.

In light of Northeastern Land Services v. NLRB (and given what is a seemingly increasingly charged union organizing environment), employers should:

• Draft employment policies and/or agreements that balance protecting a company’s legitimate business interests (like protecting trade secrets and proprietary information) without restricting the rights of employees to discuss their wages, hours and other terms or conditions of employment;
• Define confidential information in narrow ways, remove any (even inadvertent) 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 (e.g., employee handbooks) do not run afoul of the Act (like the right to have a co-worker present for investigatory interviews) or EEOC protections on reporting or discussing EEOC incidents.

For more information, please contact Fred Mendelsohn at 312/840-7004 or fmendelsohn@burkelaw.com.