United States: The NLRB Takes Another Cut At Non-Disclosure Agreements

Last Updated: April 5 2016
Article by Michael P. Elkon

In recent years, the National Labor Relations Board has increased its scrutiny of various employer practices, including those of non-unionized employers. Among the areas of scrutiny have been non-disclosure of confidential information provisions, which the NLRB has ruled can be in violation of Section 7 of the National Labor Relations Act, specifically the provision that protects employees' rights to engage in concerted activities for the purpose of mutual aid and protection." A recent example of the NLRB's stance on non-disclosure provisions - as well as other, seemingly anodyne employment documents - can be found in the matter of Quicken Loans and Charging Party Austin Laff, decided by Administrative Law Judge Dickie Montemayor.

The Facts

The Quicken Loans decision arises out of that most mundane of situations: two coworkers having a discussion while using urinals. The version of this conversation between mortgage bankers Laff and Michael Woods that was credited by ALJ Montemayor was as follows (from Laff):

I cross path with Woods on the way to the restroom. He looked kind of upset so I said something to the effect of, "Hey Mike, Smile." And he proceeded to tell me that he had a client who had been dropped in his pipeline who had refinanced about four years ago and had been trying to get in touch with a Client Specialist for over a week, and that client should get in touch with a "fucking Client Care Specialist and quit wasting his fucking time." [Laff] then testified that he responded to Wood's by telling him he "understood why he was frustrated."

The conversation was overheard by a third coworker, who reported what he heard to management. After investigating the situation, management at Quicken Loans chose to terminate Laff's employment for not being truthful in addressing what was said. Management also sent a warning letter to Woods about the incident.  Finally, OL Manager Jorge Mendez sent out an email in large font stating the following:

Under no circumstances should we be discussing the pay we receive, in an area that a client or potential client could ever hear us. This goes along with discussion specific clients, client profiles, credit costs and rates that we have given to clients.

The Holding

The NLRB ALJ found that the conversation between Laff and Woods amounted to protected activity pursuant to Section 7 of the NLRA because they were discussing common concerns regarding the terms and conditions of their employment and that Woods' intention was to improve the terms and conditions of employment.  ALJ Montemayor found an adverse inference against Quicken Loans for not producing Woods to testify at the hearing and this was central to the finding of protected activity.

Based on the conclusion that Laff and Woods were engaged in protected activity, ALJ Montemayor found that Quicken Loans' discharge of Laff and discipline of Woods were in violation of the NLRA. However, the findings went on to address a number of aspects of Quicken Loans normal business practices that have implications for all employers that take basic steps to protect their confidential information. Those findings are as follows:

  • ALJ Montemayor found that the Mendez email contained rules that were unlawful on their face because they "specifically prohibited employees from discussing their terms and conditions of employment and their pay," incuding the "discussion of specific clients, client
    profiles, credit, costs and rates that are given to clients." This finding has implications for work rules that employers impose to prevent employees from discussing confidential information unless the employees have a need to know that information. As such, the finding could be argued to be at odds with one of the basic ways that employers take reasonable means to protect their trade secrets.
  • He found that basic non-disclosure of confidential information in Laff's separation agreement covering "client information, employee information, financial information, or any other internal information about Quicken Loans" violated Section 7 by chilling Laff's ability to talk to Quicken Loans employees about the terms and conditions of their employment.  Again, this holding implicates another of the basic means that employers use to protect trade secrets: agreements with out-going employees regarding the use or disclosure of confidential information. ALJ Montemayor also found that the return of property provision of the agreement violated Section 7 because it did not have a carve-out for the disclosure of handbooks to government agencies and the prohibition on contacting customers or employees violated Section 7 because it pertained "for any reason."
  • ALJ Montemayor found that the questioning of Laff regarding the bathroom conversation amounted to a coercive interrogation about the work rules in question. This holding has implications for workplace investigations that employers may perform regarding the potential mishandling of confidential information. Additionally, he found that Quicken Loans "created the impression of surveillance" by inquiring into a bathroom conversation, a holding that could have implications for investigations into communications made on an employer's computer system, another area where the NLRB could find that employees would have some expectation of privacy. 

In the end, ALJ Montemayor ordered (among other things) that Quicken Loans reinstate Laff with backpay, remove any reference to the discipline of Laff or Woods, end its practices held in violation of the NLRA, and make a posting in its Scottsdale facility regarding the NLRA and the changes to its work rules. 

The Upshot

Now, there are several caveats to be mentioned with this ruling. Section 7 does not apply to management-level employees, so many (most?) of the personnel whom employers would worry most about in competition are not covered. The Laff ruling is only the opinion of one ALJ (and arising out of an NLRB region noted to be pro-employee). And given the available remedies, it's generally true that the worst an employer will face from running afoul of the rules will be equitable relief in the form of changing its practices. However, the ruling serves as an important reminder that the NLRB is taking a close interest in employment practices that are relevant for employers that take reasonable means to protect their trade secrets. An employer should consider whether its agreements with non-management employees, its handbook policies, its exit documents, and ther practices of its managers all acknowledge the stance taken by the NLRB concerning concerted activity.

Quicken Loans, Inc. (NLRB).pdf (236.87 kb)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Michael P. Elkon
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions