We have reported in previous Legal Alerts that the National Labor Relations Board ("NLRB") is closely scrutinizing employers' personnel policies and workplace rules to identify language that unlawfully restricts employees' rights under the National Labor Relations Act ("NLRA"). On March 24, 2014, the United States Court of Appeals for the Fifth Circuit upheld an NLRB finding that an employee confidentiality agreement's provision prohibiting employees from disclosing "financial information" and "personnel information and documents" to outsiders violated the NLRA.
The Court's Decision in Flex Frac Logistics, L.L.C. v. NLRB
The NLRA gives employees the right to act concertedly for the
purpose of collective bargaining or other mutual aid and
protection. The NLRB and the courts have recognized that this
statutory provision gives employees the right to discuss wages and
other terms and conditions of employment with each other and with a
union. An employer's interference with this right, whether by
disciplining employees who exercise the right, by expressly
prohibiting such conduct, or by merely maintaining a workplace rule
that chills the exercise of the right, is an unfair labor practice
under the NLRA.
In its recent decision in Flex Frac Logistics, L.L.C. v.
NLRB, the Fifth Circuit reviewed an NLRB decision finding that
an employee confidentiality agreement unlawfully interfered with
employees' right to engage in protected concerted activity. The
confidentiality agreement prohibited employees from disclosing
confidential information to anyone outside the company and defined
"confidential information" to include "financial
information" and "personnel information and
documents." Although the agreement did not explicitly prohibit
the disclosure of wage information, the Fifth Circuit found
sufficient evidence to support the NLRB's conclusion that the
agreement would chill employees' exercise of their rights under
the NLRA because employees would reasonably believe that the
agreement prohibited the disclosure of wage information. The court
noted that the agreement's definition of confidential
information included "financial information," which
necessarily encompasses wages, and that the reference to
"personnel information" was not limited so as to exclude
wage information. Moreover, the court stated that the NLRB did not
have to base its finding of an unfair labor practice in this regard
on evidence that employees did, in fact, interpret the
confidentiality agreement as restricting their disclosure of wage
information to outsiders. It is sufficient, the court held, that
the language of the agreement would reasonably tend to chill
employees' exercise of their NLRA rights. Because the language
at issue here could reasonably be interpreted as barring disclosure
of wage rates, the court upheld the NLRB's ruling that the
confidentiality agreement violated the NLRA.
Practical Implications
In recent years, the NLRB has applied increasing scrutiny to employee handbooks, workplace rules, and employment contracts to identify provisions that may reasonably be interpreted as prohibiting conduct protected by the NLRA, even going so far as to find a handbook provision requiring employees to be courteous to others unlawful. As the Flex Frac Logistics decision illustrates, employers cannot rely on the courts to rein in the NLRB's excesses in this area. Employers should therefore be proactive in reviewing their personnel policies and employee agreements to ensure that they do not contain provisions that are so broadly worded as to infringe upon employees' right to act in concert with respect to the terms and conditions of employment. Often, the addition of only a few clarifying words can make the difference between a lawful rule that furthers the employer's legitimate business interests and an unlawful rule that can lead to costly unfair labor practice proceedings.
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