NLRB Says “No Workplace Secrets Allowed!”

The National Labor Relations Board (“NLRB”) has held that an employer’s enforcement of a commonly used workplace policy could expose the employer to liability under the National Labor Relations Act (“NLRA” or “the Act”).

This particular matter involved the technology company MCPc, which had a confidentially provision in its employee handbook which read. In part, as follows:

[D]issemination of confidential information within [the company], such as personal or financial information, etc., will subject the responsible employee to disciplinary action or possible termination . . . .

This type of policy, in one form or another, is commonly utilized by many employers.  In the case of MCPc, the company fired an employer after he announced at a meeting that the salary paid to a particular executive, stating the specific amount of the executive’s compensation, would have been used to hire additional engineers.  In terminating the employee for his statements, MCPc also based the decision on the employee improperly accessing computer files to discover the executive’s salary.

Last month, the NLRB upheld an administrative law judge’s decision, finding that MCPc’s internal confidentiality policy was overbroad and violated The NLRB held that this language violated Section 8(a)(1) of the NLRA because employees would reasonably construe the overbroad rule to prohibit discussion of wages or other terms and conditions of employment with their coworkers.  In upholding the ruling against MCPc for the termination of the employee, the NLRB agreed that the employee’s discussion was protected discussion because it involved the terms and conditions of his employment, i.e. staffing shortages.

In recent years, the NLRB has used the same rationale to find many employers’ social media policies to be in violation of the Act.  Another lesson to remember from the NLRB’s assault on workplace social media policies is that an employer can be found in violation on the basis of an overbroad policy alone, even if there is no action taken against an employee for violation of the policy.  As many employers also learned from the NLRB’s social media focus, even non-union employers can be found in violation of the NLRA.

Where does this leave employers?  As mentioned above, many employers have similar policies in their employee handbooks.  This is often for the purpose of avoiding the inevitable bickering and complaints that arise when employees start comparing their respective salaries, and are aggrieved over their perception of being underpaid, or another employee being overpaid.  Unfortunately, that goal is exactly what the NLRB views as a violation.

From the perspective of the NLRB’s “bigfoot” approach in the area of social media policies, I think employers are ultimately going to have to scrap the broadly worded confidentiality policies, and opt instead for narrowly tailored policies that protect against the disclosure of trade secrets and other confidential or proprietary information.

Mark Fijman is a labor and employment attorney with Phelps Dunbar, LLC, which has offices in Louisiana, Mississippi, Florida, Texas, Alabama, North Carolina and London. To view his firm bio, click here. He can be reached at (601) 360-9716 and by e-mail at fijmanm@phelps.com

“Don’t Mess with Texas Pt. 2” The EEOC Fires Back Over Criminal Background Checks

Back in November 2013, I posted about the State of Texas suing the Equal Employment Opportunity Commission (“EEOC”), alleging that the federal agency has overstepped its statutory authority by imposing limits on employers’ use of criminal background checks in making employment decisions. 

The EEOC has now moved a federal court in the Northern District of Texas to dismiss the State’s case.  Strategically, the EEOC is trying to procedurally kill the State’s  lawsuit before it be judged on the merits.

It has been well over a year since the EEOC issued strict enforcement guidelines, seeking to limit employers’ ability to make employment decisions based on an individual’s criminal history. The stated rationale for the EEOC’s position is that employers’ reliance on criminal records as a factor in hiring decisions disproportionately affects minorities, who statistically have higher rates of arrest and criminal conviction, and has a disparate impact in violation of Title VII of the Civil Rights Act (“Title VII”). While not completely banning the use of background checks, the EEOC guidelines place a burden on employers to prove that such reliance is based on business necessity.

The lawsuit by the State of Texas alleges that the EEOC “purports to limit the prerogative of employers, including Texas, to exclude convicted felons from employment” and that the State of Texas and “its constituent agencies have the right to impose categorical bans on the hiring of criminals, and the EEOC has no authority to say otherwise.”

On January 27, 2014, the EEOC filed its Motion to Dismiss, alleging that: (1) the federal court lacks jurisdiction because the EEOC’s “guidance lacks legal effect”, (2) the State of Texas lacks standing to bring the suit, and (3) that none of the State’s claims are “ripe”.

As to the first argument, the EEOC seems to be engaging in circular logic and trying to have its cake and eat it too.  As I pointed out in my initial post, one of the complaints about the EEOC’s hard-nosed guidelines is that Congress has never granted the federal agency such rulemaking authority, and that the guidelines were an illegitimate exercise of authority.  In its Motion, the EEOC argues that since the guidelines ostensibly lack legal effect, i.e. employers are not legally required to follow them, the federal court has no jurisdiction to rule.  In my opinion, the EEOC is being disingenuous and too cute by half, and the court is unlikely to be amused.  If the EEOC’s “guidance lacks legal effect”, someone should please tell the companies that the EEOC has recently sued over their criminal background check policies, such as Dollar General and BMW, which I’ve discussed in earlier posts.

The rest of the EEOC’s arguments essentially argue that the State has no standing to contest the guidelines because it cannot prove “it has suffered a concrete injury” and lastly that the EEOC has not taken a “final agency action” and as such, any action by the federal court would be premature.

In a non-dispositive ruling on February 14, 2014, the federal court granted the State of Texas an extension of time, up until March 4, 2014, to respond to the EEOC’s Motion.

While I’m always reluctant to make prognostications about what a judge will do, in this case, I am going to go out on a limb and predict that the federal court in Lubbock, Texas will deny the EEOC’s Motion.  Other federal courts have recently handed the EEOC defeats over these guidelines and I don’t expect a Texas court will be shy about responding to the EEOC’s request for them to “butt out”.  I’ll keep you updated.

Mark Fijman is a labor and employment attorney with Phelps Dunbar, LLC, which has offices in Louisiana, Mississippi, Florida, Texas, Alabama, North Carolina and London. To view his firm bio, click here. He can be reached at (601) 360-9716 and by e-mail at fijmanm@phelps.com