United States: Divided NLRB Rules Employer Policy Protecting Customer Information Is Lawful

Employers can prohibit the use by employees of the names, social security numbers and credit card numbers of customers in furtherance of organizational activities.  If this seems like it should have been a foregone conclusion, a recent case from the NLRB shows how the agency's continued parsing of employer policies could easily have turned this notion on its head.

In Macy's, Inc., 365 NLRB No. 116 (August 14, 2017) a number of the employer's policies had been challenged as unlawful. Many of the policies were found to violate the Act.   The employer, an operator of department stores, chose to appeal only one aspect of its policies:  the Administrative Law Judge's findings that the employer's policies  prohibiting the use of customer information were unlawful.  The employer had three policies addressing use of customer information.

The first employer policy defined confidential information as follows:

What is confidential information?  It could be business or marketing plans, pricing strategies, financial performance before public disclosures, pending negotiations with business partners, information about employees, documents that show social security numbers or credit card numbers–in short any information, which if known outside the Company could harm the Company or its business partners customers or employees or allow someone to benefit from having this information before it is publicly known.

Just as our Company requires that its own confidential information be protected, our Company also requires that the confidential information and proprietary information of others be respected. . .

We are all trusted to maintain the confidentiality of such information and to ensure that the confidential information, whether verbal, written or electronic, is not disclosed except as specifically authorized.  Additionally, it must be used only for the legitimate business of the Company.

The Company also maintained a "USE OF PERSONAL DATA" policy:

The Company has certain personal data of its present and former associates, customers and vendors.  It respects the privacy of this data and is committed to handling this data responsibly and using it only as authorized for legitimate business purposes.

What is considered personal data?  It is information such as names, home and office contact information, social security numbers, driver's license numbers, account numbers and other similar data.

The Use of Personal Data policy stated that employees must follow all "policies and measures adopted by the Company for the protection of such data from unauthorized use, disclosure or access."

Finally, the Company maintained a "CONFIDENTIALITY AND ACCEPTABLE USE OF COMPANY SYSTEMS" policy:

Any information that is not generally available to the public that relates to the Company's or the Company's customers, employees, vendors, contractors, service providers, Systems etc., that you receive or which you are given access during your employment or while you are performing services for the Company is classified as 'Confidential' or 'Internal Use Only.'

The employer's Acceptable Use policy prohibited the sharing of such information with third parties.

The Charging Party union challenged these rules as unlawful, asserting that they would lead a "reasonable employee" to interpret them as prohibiting contact with customers during a labor dispute, something that is protected by the Act.  Complaint issued.

The Administrative Law Judge's Decision

The Judge, after discussion of the policies in general, found the restrictions related to customers violated Section 8(a)(1), noting that the General Counsel "challenges the restrictions on the use of information regarding customers and vendors.  In certain situations, employees are permitted to use such information in furtherance of their protected concerted activities. . ."  There was little discussion of the actual language of the policies other than to note that it referenced "customer" information and that such information might include that used for purposes of protected activity.

Board Majority Sees It Differently

A two person majority (Chairman Miscimarra and Member McFerran) concluded the policies related to use of customer information were lawful.  The Board noted the policy identifying the information considered by the employer to be confidential "specifically defines" confidential information and the "only information covered by that rule that arguably relates to customers is 'social security numbers or credit card numbers.'"  The Board noted that the General Counsel had conceded that employees do not have a right to use such information.  As to the Use of Personal Data an Acceptable Use of Company Systems restrictions, the Board held both rules "limit the use or disclosure of customer names and contact information"–information that could arguably be used in a labor dispute, but that "such rules "by their terms, only apply to customer names and contact information obtained from the [employer's] own confidential records."

The Board then cited the numerous cases holding that employees who use information taken from employer systems are outside the protection of the Act, including one where the employee had forwarded hundreds of company emails, some of which included confidential data, to a personal email account.

In a footnote, Chairman Miscimarra reiterated his call, set forth in prior cases as a dissent, that the test as to whether an employee would "reasonably construe" certain language to infringe on rights should be overruled and repudiated by the courts as unworkable.

Dissent Interprets Policies As Restrictive

Member Pearce dissented, stating employees "would reasonably interpret these broad rules as prohibiting or restricting their disclosure and use of customer information, for all purposes, including those that may implicate their terms and conditions of employment."  The dissent argued what many employers asserted in defense of handbook policies,– that the majority was reading phrases of the policies "in isolation," to come to its conclusion.  Specifically, the dissent noted that the definition of confidential information included "any information, which if known outside the Company could harm the Company...."  This phrase arguably isolates a few words while ignoring the more detailed definition preceding it.

Takeaways

This case is another example of how the standard of evaluating the lawfulness of language in a handbook can lead some very smart practitioners to come to widely disparate conclusions.  Here we have four seasoned labor professionals (an ALJ and three Board members) coming to different conclusions.  Indeed, the fact that the Chairman and Member McFerran were together in the majority is unusual enough (it's probably happened on a case like this only a handful of times) to show that reasonable minds can and do differ as to the meaning of certain policies.  If these professionals cannot agree on what language constitutes a violation of the Act, then it certainly makes one wonder whether the "reasonable employee" who is envisioned in the standard would agree with any of the interpretations or hold a different view.    It seems likely the standard will be changed in the coming months as the make-up of the Board changes.

Until then, the drafting rules that have helped employers avoid problems of this sort remain in effect.  Tailor the policy to achieve the business objective.  In this case, the definition of confidential information was very specific, and narrow.  The types of information under the Use of Personal Data and Use of Company Systems policies were restricted, appropriately, to information that the employer collects as part of its business.

The case also offers an excellent recitation of all the instances where employee use of confidential information has been found to be unprotected.

Divided NLRB Rules Employer Policy Protecting Customer Information Is Lawful

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.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.