Employment Law Daily NLRB: Confidentiality and media contact rules clearly did not interfere with Section 7 rights
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Wednesday, October 16, 2019

NLRB: Confidentiality and media contact rules clearly did not interfere with Section 7 rights

By Ronald Miller, J.D.

Confidentiality and media contact rules are now generally categorized as Category 1(a) rules under Boeing, so there was no need for the Board to take the step of addressing any general or specific legitimate interests justifying the rules.

An employer’s confidentiality and media contact rules would not be interpreted by an objectively reasonable employee as potentially interfering with the exercise of Section 7 rights, ruled a divided NLRB, in a 3-1 decision. The Board observed that the confidentiality rule required employees to protect the confidentiality of the employer’s client and vendor lists, so it targeted business information and did not target information central to the exercise of Section 7 rights, such as employee salary or wage information. As to the media contact rule, the Board concluded that, read as a whole, a reasonable employee would understand that the rule only precluded employees from speaking on behalf of the employer when approached for comment by the media. Member McFerran filed a separate dissenting opinion (LA Specialty Produce Co., October 10, 2019).

The employer is a wholesale distributor of produce. Since 1998, it has maintained an employment manual containing a confidentiality and nondisclosure rule and a media contact rule. The confidentiality rule requires employees to preserve the confidentiality of information regarding matters that are confidential and proprietary of the employer, including client/vendor lists.

Confidentiality rule. With respect to the confidentiality rule, applying the standard set forth in Boeing Co., an administrative law judge found the maintenance of the rule unlawful. In her view, the rule interfered with the exercise of Section 7 rights, and the interference outweighed the employer’s business justification for the rule. The ALJ acknowledged that the employer had a substantial justification in preventing client and vendor lists containing sensitive pricing and discount information from being disclosed to its competitors. But she found that, as written, the confidentiality rule was not targeted at protecting this sensitive information and it prohibited employees from sharing even customer and vendor names with third parties, such as labor unions. The ALJ also noted that under Section 7 employees have the right to appeal to an employer’s customers in a labor dispute.

While the Board agreed with the ALJ that employees have a Section 7 right to concertedly appeal to third parties, including their employer’s customers, for support in a labor dispute, it noted that the ALJ did not explain, and the Board could not perceive, how the language at issue would be reasonably read to interfere with that right. The Board observed that the confidentiality rule required employees to protect the confidentiality of the employer’s client and vendor lists. It said nothing about talking to the employer’s clients or vendors.

Moreover, the Board noted that under its ruling in Macy’s Inc., “employees may be lawfully disciplined or discharged for using for organizational purposes information improperly obtained from their employer’s private or confidential records.” Thus, the Board concluded that the confidentiality rule, as interpreted by an objectively reasonable employee, did not prohibit or interfere with the exercise of Section 7 rights.

The Board now generally categorizes rules that prohibit the disclosure of confidential and proprietary customer and vendor lists as Category 1(a) rules under Boeing. Rules seeking to protect such lists target the protection of business information a company has developed over time. These rules do not target information central to the exercise of Section 7 rights, such as employee salary or wage information. Accordingly, there was no need for the Board to take the next step of addressing any general or specific legitimate interests justifying the rule.

Media contact rule. The media contact rule provides that employees approached for interview and/or comments by news media cannot provide them with information. Section 7 generally protects employees when they speak with the media about working conditions, labor disputes, or other terms and conditions of employment. The ALJ found that maintenance of the media contact rule was unlawful. However, the Board concluded that the media contact rule at issue here was not facially unlawful unless it would reasonably be interpreted as infringing on the Section 7 right to communicate employees’ personal opinions about wages, hours, or working conditions to the media.

The Board reversed the ALJ and found that the media contract rule did not violate the NLRA. When reasonably interpreted, the Board found that the rule provides only that when employees are approached by the news media for comment, they cannot speak on the employer’s behalf. Since employees have no right under the Act to speak on their employer’s behalf, the media contact rule does not potentially interfere with the exercise of NLRA rights.

While the Board recognized that the first sentence of the rule, standing alone, might suggest that employees may never speak to the news media when approached for comment, it concluded that an objectively reasonable employee would understand that the second sentence qualified the first sentence by explaining that only the company president was authorized and designated to comment on company matters. Thus, read as a whole, a reasonable employee would understand that he or she is only precluded from speaking on behalf of the employer when approached for comment.

Further, the Board designated rules that prohibit employees from speaking on behalf of their employer as Boeing Category 1(a) rules. Accordingly, the Board concluded that since there is no Section 7 right to speak to the media on behalf of the employer, such rules, when reasonably interpreted, would not potentially interfere with the exercise of Section 7 rights.

Dissent. In a dissenting opinion, Member McFerran argued that the Board’s attempted clarification of the Boeing test has now resulted in the confidentiality and media rules at issue being henceforth categorically exempt from scrutiny, regardless of how a reasonable employee would read the particular rule in question, or what chilling effect the rule might have on workers’ exercise of their Section 7 rights. Further, McFerran argued that it is the Board’s responsibility to redress rules that reasonably tend to chill the exercise of Section 7 rights, but that, without justification, Boeing jettisoned what the Board had carefully crafted for this purpose and replaced it with a new framework that is not merely unworkable, but impermissible.

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