Employment Policies

Confidentiality Obligations Interfere with Protected Rights

Many employers, particularly those in Silicon Valley, prohibit employees from using or disclosing “confidential information.”  Many employee handbooks have policies limiting employee discussions regarding confidential business information outside the workplace.  Employers typically use very broad definitions of “confidential information,” and, according to the General Counsel for the National Labor Relations Board, the confidentiality obligations may interfere with protected rights.

On March 18, 2015, Richard F. Griffin, Jr., General Counsel for the NLRB issued a report concerning recent employer rule cases.  The report discusses different policies and workplace rules that the NLRB determined violated employee Section 7 rights.  According to the General Counsel, “Under the Board’s decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), the mere maintenance of a work rule may violate Section 8(a)(1) of the Act if the rule has a chilling effect on employees’ Section 7 activity.”

Employees have a Section 7 right to discuss wages, hours, and other terms and conditions of employment with fellow employees, as well as with nonemployees, such as union representatives. Thus, according to the General Counsel,

an employer’s confidentiality policy that either specifically prohibits employee discussions of terms and conditions of employment— such as wages, hours, or workplace complaints—or that employees would reasonably understand to prohibit such discussions, violates the Act. Similarly, a confidentiality rule that broadly encompasses “employee” or “personnel” information, without further clarification, will reasonably be construed by employees to restrict Section 7-protected communications.

Citing Flamingo-Hilton Laughlin, 330 NLRB 287, 288 n.3, 291-92 (1999).

In contrast, broad prohibitions on disclosing “confidential” information are lawful so long as they do not reference information regarding employees or anything that would reasonably be considered a term or condition of employment, employers have a substantial and legitimate interest in maintaining the privacy of certain business information.

Citing Lafayette Park Hotel, 326 NLRB 824, 826 (1998), enforced, 203 F.3d 52 (D.C. Cir. 1999); Super K-Mart, 330 NLRB 263, 263 (1999).

The report covers several areas, but for today’s article I wanted to point out a few of the rules regarding confidentiality discussed by the General Counsel.  You can review the entire report here.

Rules That Interfere with Protected Rights

The General Counsel found the following rules regarding confidentiality would unlawfully interfere with protected rights:

  • Do not discuss “customer or employee information” outside of work, including “phone numbers [and] addresses.”
  • “Never publish or disclose [the Employer’s] or another’s confidential or other proprietary information. Never publish or report on conversations that are meant to be private or internal to [the Employer].”
  • “Discuss work matters only with other [Employer] employees who have a specific business reason to know or have access to such information.. .. Do not discuss work matters in public places.”

Rules That Do Not Interfere with Protected Rights

The General Counsel found the following rules regarding confidentiality would not unlawfully interfere with protected rights:

  • No unauthorized disclosure of “business ‘secrets’ or other confidential information.”
  • “Misuse or unauthorized disclosure of confidential information not otherwise available to persons or firms outside [Employer] is cause for disciplinary action, including termination.”
  • “Do not disclose confidential financial data, or other non-public proprietary company information. Do not share confidential information regarding business partners, vendors or customers.”
  • Prohibition on disclosure of all “information acquired in the course of one’s work” when “nested among rules relating to conflicts of interest and compliance with SEC regulations and state and federal laws” such that employees would reasonably understand the information described as encompassing customer credit cards, contracts, and trade secrets, and not Section 7-protected activity.

California employers should also be aware that California’s revised Equal Pay Act now prohibits employers from interfering with employees’ right to discuss their own wages as well as other employee wages.

Employers should carefully review their existing confidentiality agreements and workplace rules to ensure they do not interfere with protected rights.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

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