NLRB wades into lawfulness of employee policies under NLRAOnce again a company’s workplace policies were found to have violated the National Labor Relations Act (NLRA). This time on July 29, 2016, the U.S. Court of Appeals for the District of Columbia Circuit endorsed the National Labor Relations Board’s (NLRB) view that an employer violates the NLRA by maintaining workplace policies that employees may reasonably view as coercive.

Workplace Confidentiality and Nondisparagement Policies Violated NLRA

Specifically, Quicken Loans’ confidentiality and non-disparagement policies were found to have violated the NLRA because they interfered with workers’ rights to discuss labor unions and their job conditions. See Quicken Loans, Inc. v. NLRB, (7/29/16). Quicken Loans required employees to sign an employment agreement that had two disputed provisions.

  • Quicken Loans’ confidentiality rule prohibited employees from disclosing “personnel information” to any person “except as may be authorized by the Company in writing.” Personnel information was defined to include employee lists and rosters and information about co-workers such as home and mobile phone numbers and e-mail and home addresses.
  • Quicken Loans’ mortgage bankers were also required to agree to its non-disparagement rule. That rule prohibited employees from acting alone or in cooperation with others to “publicly criticize, ridicule, disparage to defame the Company or its products, services, policies, directors, officers, shareholders or employees.”

Both provisions were found to violate employees’ Section 7 rights. In reaching this decision, the Court rejected Quicken Loans’ argument it had never enforced the rule in a manner that restricted NLRA-protected activity and its contention that employees didn’t understand the rule as limiting their statutory rights. Here is an excerpt from the Court’s opinion:

… Quicken contends that the Board should have considered whether Quicken employees actually construed the Confidentiality Rule to prohibit Section 7 activity … or Quicken had ever enforced the Rule to interfere with Section 7 activity. Those arguments, however, fail to come to grips with the governing law. The validity of a workplace rule turns not on subjective employee understandings or actual enforcement patterns, but on an objective inquiry into how a reasonable employee would understand the rule’s disputed language. Thus [the NLRB] is merely required to determine whether ’employees would reasonably construe the language to prohibit Section 7 activity … and not whether employees have thus construed the rule.

The Court reasoned that such an objective assessment of employer rules “serves an important prophylactic function,” the court said because the NLRB has a “proactive role in safeguarding employees’ rights.”

For similar reasons, the court concluded that the non-disparagement rule also violated Section 7 rights. In so doing, it again rejected the employer’s argument that there was no evidence it ever used the disputed rule to restrict employees from exercising their rights. “The absence of enforcement could just as readily show that employees had buckled under the Employment Agreement’s threat of enforcement.”

Professional Pointers – Plan For NLRB Scrutiny of Employee Agreements

For me, this opinion illustrates two strategies that  companies can take in response to an aggressive NLRB: Hope that your company’s employee policies and agreements aren’t ever under the NLRB’s microscope or respond to the challenge and plan for such scrutiny. I say this because we have repeatedly represented employers in Quicken Loans position and covered on this blog similar results. See NLRB Makes Gambling with Your Company’s Employee Handbook a Risky Bet, NLRB Finds Employer’s Workplace Rules Violated Federal Labor Law, or Employee Manuals Need Spring Cleaning Thanks to the NLRB.

Here are three additional points to consider:

  1. First, I would almost a guarantee that restrictions in your company’s employee policies or agreements are going to run afoul of the NLRB. As the Quicken Loans’ opinion emphasized, such anti-disparagement policies “[fly] in the teeth of Section 7.”
  2. Second and of significant note for employers and HR professionals is that Quicken Loans unsuccessfully argued that it had never enforced the rules in a manner that restricted NLRA protected activity and that there was no evidence that employees construed understood the rules to restrict rights under the NLRA. Companies should take this finding as a neon, bulletin board sign to go through your employee agreements and policies to remove similar language that could be construed to violate the NLRA.
  3. Third, we collaborate closely with employers to draft employee policies and provisions with the goal of avoiding NLRB violations. Additionally, we encourage employers to include an express statement to the effect that nothing in a particular workplace rule is intended to interfere or otherwise restrict an employee’s statutory rights under Section 7 of the NLRA to engage in union activity or concerted activity for their mutual aid and protection. In contrast, it does not appear that such language was found in Quicken Loans’ policies (at least there was no argument to such a savings provision in the opinion). Such a provision when coupled with the evidence Quicken Loans presented that its rules had not been enforced in referenced to Section 7 activity may have made a difference in the outcome.

For more information about this decision or updating your company’s employee manuals and agreements to avoid NLRB violations and compliance with other employment laws, contact employment attorney Jason Shinn.