Confidentiality and Non-Disparagement Provisions in Employment Agreement Deemed Unlawful by NLRB Judge

Over the past two years, the National Labor Relations Board (the “Board”) has attacked various employment policies of union and non-union employers alike, ranging from social media policies to policies that establish protocol for employees to follow when responding to media inquiries. The Board also has been critical of at-will language commonly found in employee handbooks and policies used by employers throughout the country. In light of the Board’s recent actions, some employers—particularly non-union employers that have not historically focused on Board developments—have begun to reassess policy language that has long existed in their handbooks. Due to a recent administrative law judge (“ALJ”) decision, employers should add employment agreements to their list of employment practices to review and Board developments to watch in 2013.

Last week, in Quicken Loans, Inc., No. 28-CA-75857 (N.L.R.B. A.L.J. Jan. 8, 2013), an ALJ upheld a challenge to confidentiality and non-disparagement provisions in an employment agreement distributed by an employer to its workers (mortgage bankers) nationwide. The ALJ concluded that the language “chilled” employees’ rights to engage in protected concerted activities in violation of the NLRA, despite the employer’s argument that the provisions were necessary to protect its investment in educating and training workers.

Language at Issue

The “Proprietary/Confidential Information” provision in the employment agreement prohibited employees from disclosing, among other things, “non-public information relating to . . . the Company’s business, personnel[,] . . . all personnel lists, [and] personal information of co-workers . . . such as home phone numbers, cell phone numbers, addresses and e-mail addresses” to “any person, business or entity.”

The “Non-Disparagement” section barred employees from publicly criticizing, ridiculing, disparaging, or defaming “the Company, its products, services, [and] policies . . . through any written or oral statement . . . .”

Language Deemed Unlawful

The ALJ opined that there was “no doubt” these provisions violated the NLRA. More specifically, he decided that the confidentiality provision was unlawful because it prohibited employees from discussing “wages and other benefits they receive” as well as “the names, wages, benefits, addresses or telephone numbers of other employees” with fellow employees and union representatives. And, he concluded that the non-disparagement provision also violated the law because “[w]ithin certain limits, employees are allowed to criticize their employer and its products” through appeals to the public and fellow workers.

Takeaway

Many companies, including non-union employers, have handbooks, policies, and employment agreements that contain language similar to that in the confidentiality and non-disparagement provisions at issue in the Quicken Loan case. Employers should consider reviewing these policies and agreements in light of the NLRA’s protections, as recently interpreted by the Board. For answers to questions regarding whether the language in handbooks, policies and employment agreements would withstand scrutiny from the Board, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.

James J. La Rocca is an Associate in the Gibbons Employment & Labor Law Department.
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