Labor & Employment Law Daily NLRB OKs blanket confidentiality rules for workplace investigations
Friday, December 20, 2019

NLRB OKs blanket confidentiality rules for workplace investigations

By Lisa Milam, J.D.

In a divided 4-member decision, the NLRB restored employers’ right to impose a work rule requiring employee confidentiality in all workplace investigations.

A blanket work rule requiring employees to maintain confidentiality during the course of a workplace investigation is presumptively lawful, a divided NLRB held, overturning an Obama-era Board decision that required employers to determine on a case-by-case basis whether such confidentiality is necessary. Applying its Boeing Co. rubric, the majority held that investigative confidentiality rules are categorically lawful (and fall under Boeing Category 1) when they apply only to currently open investigations. However, if a confidentiality rule is not limited on its face to the duration of an investigation, it falls within Boeing Category 2, and thus requires a determination of whether there is a legitimate employer justification for the restriction that outweighs any impact on employees’ Section 7 rights (Apogee Retail LLC dba Unique Thrift Store, December 16, 2019).

Term-ending reversals. With this decision, the NLRB continued its practice of issuing significant, often controversial decisions on the eve of a Board member’s departure—in this case, Lauren McFerran, the Board’s sole Democratic member, whose term expired December 16. It also marked yet another McFerran dissent on these critical questions of Board law, and the most recent in a wave of agency decisions overturning Obama-era rulings that had caused much consternation among employers.

Apogee Retail is the latest in a string of recent National Labor Relations Board decisions that seek to ground interpretation of the National Labor Relations Act in common sense and reality,” Mark G. Kisicki, a Shareholder in the Phoenix, Arizona office of Ogletree Deakins, told Labor and Employment Law Daily. In particular, the NLRB has restored the right of employers to manage their operations by promulgating reasonable work policies and rules. “The Board used this decision to further explain that NLRA rights are not inviolate, but must be balanced against the legitimate, and often compelling, justifications employers have for workplace rules that are facially neutral,” Kisicki added.

Confidentiality rule. At issue in this case was a retailer’s written work rule contained in its loss prevention policy, which prohibits employees from “[r]efusing to courteously cooperate in any company investigation,” including by engaging in “unauthorized discussion of investigation or interview with other team members.” Justifying its policy, the employer explained that several of its prior investigations had been hindered by a lack of confidentiality. For example, employees conferred in advance about what they were going to say in their investigatory interviews, some workers feared repercussions when a manager was the subject of an investigation, or were threatened with retaliation or with reputational damage.

Banner Health overturned. In its 2015 decision in Banner Health System dba Banner Estrella Medical Center, the Board addressed whether an employer may require employees not to discuss ongoing workplace investigations with one another without running afoul of the NLRA. That decision imposed a requirement for employers to prove on a case-by-case basis that the integrity of an investigation would be compromised without confidentiality.

Under the Banner Health framework, an employer’s interests in ensuring the integrity of a workplace investigation doesn’t even come into consideration until an employer demonstrates that, in a specific investigation, a witness was in need of protection, there was a possibility that evidence would be destroyed or testimony would be fabricated, or there was a need to prevent a cover-up. In the view of the current Board majority, this approach “improperly placed the burden on the employer to determine whether its interests in preserving the integrity of an investigation outweighed employee Section 7 rights,” a burden that runs contrary to both Supreme Court and Board precedent.

Apogee Retail recognizes that the safety, human resource, compliance or management representatives conducting workplace investigations are not equipped with the tools and training to determine, on a case by case basis, whether there is an actual risk of violence justifying a confidentiality directive under Banner Health,” said Kisicki, who represented the employer in the 2015 decision. “In the real-time, real world workplace, generally applicable rules and standards are necessary, and Apogee Retail balances those real life concerns against the minimal impact on NLRA rights that a rule requiring confidentiality during an investigation might have.”

The current Board cited a number of concerns about the Banner Health decision:

  • It abandoned the Board’s obligation, first asserted by the Supreme Court in NLRB v. Great Dane Trailers, Inc., to balance employees’ Section 7 rights against an employer’s legitimate business justifications in promulgating a work rule. Rather, as the default, the employer’s interests are assigned a value of zero, and the conflicting interests are all that count.
  • It disregarded the numerous reasons why confidentiality is so important to both employers and employees, including “the obvious need to protect employee witnesses and the integrity of sensitive workplace investigations,” the majority noted. Indeed, the importance of confidentiality in this context is recognized in the Board’s own investigative procedures, as well as the procedures used by OSHA and the EEOC.
  • Relatedly, it conflicts with other federal guidance, most notably the EEOC’s endorsement of blanket confidentiality rules for workplace investigations, particularly in the context of sexual harassment complaints. The Banner framework left employers between a rock and a hard place, “caught between two regulatory schemes,” the Board observed, as they endeavor to comply with their legal obligation to promptly and effectively investigate and remedy harassment.

Banner Health had ignored the EEOC’s guidelines that advised employers to maintain confidentiality of harassment investigations so as to protect the innocent parties and victims, and because confidentiality increased the likelihood that employees would report the harassment and willingly participate in harassment investigations,” Kisicki added.

Consequently, the Board overturned its Banner Health decision.

Boeing rubric applies. Instead, the majority applied the test set forth in The Boeing Co. for evaluating facially neutral workplace rules under the Act to investigatory confidentiality rules. It held a rule that is limited to the duration of an investigation is a Category 1 rule and is generally lawful to maintain. But a rule that is not limited to the temporal constraints of an open investigation must be evaluated more closely, and so fall under Category 2. (Where a rule is silent as to duration, like the rule at issue here, employees would “reasonably interpret” it to be unlimited in duration, and thus a Category 2 rule, the Board concluded.).

On the other hand, the Board acknowledged “there may be substantial and even compelling reasons, outweighing the potential adverse effect on the exercise of Section 7 rights, for extending a confidentiality requirement well beyond the end of particular kinds of investigations, such as where the circumstances give rise to a reasonable belief that the ability of an investigative target to identify an informant may pose a threat to the safety of the informant and/or his or her family or to the security of his or her property. There may also be reasons, based on the nature of the employer’s business, for generally extending the confidentiality requirement beyond the end of any investigation.” In such instances, the relevant question is “whether an employer has one or more legitimate justifications for requiring confidentiality even after an investigation is over; and, if so, whether those justifications outweigh the effect of requiring post-investigation confidentiality on employees’ exercise of their rights under Section 7 of the National Labor Relations Act.”

Remand is required. In the case at hand, the work rule was not limited to the duration of a workplace investigation; therefore, it was a Category 2 rule. To determine its legality, the Board remanded the case to the region for further proceedings—namely, to consider whether the employer has legitimate justifications for requiring post-investigation confidentiality, and if so, whether those justifications outweigh the effect of requiring continued confidentiality on employees’ exercise of their protected rights.

McFerran’s dissent. “[T]he majority now permits American employers to hold gag rules over their workers if the rule is linked to an open investigation of workplace misconduct,” wrote Member McFerran in dissent. “The likely chilling effect on workers—who will feel compelled to choose safe silence over risky speech—is both obvious and alarming.” In her view, the majority’s framework affords insufficient protection for employees’ Section 7 rights, asserting: “There is simply no denying that employer gag rules infringe on employees’ labor law rights.”

“It should be obvious (and it has been obvious to the Board) that when an employer makes employees keep silent about a workplace investigation it will be virtually impossible for employees to engage in ‘concerted activities for the purpose of mutual aid or protection’ concerning the investigation. In McFerran’s view, “the impact of confidentiality rules on Section 7 rights is not ‘comparatively slight.’ It is drastic.” But the majority countered, “a rule that merely requires employees not to disclose what they say or hear during an investigative interview concerning an incident leaves employees free to discuss the incident itself. Moreover, such a rule has no impact whatsoever on employees’ right to discuss workplace issues generally, including specific instances of discipline as well as disciplinary policies and procedures generally.” Also, as a practical matter, the majority added, “many conversations about investigative interviews do not implicate Section 7 rights at all.”

And while McFerran conceded that employers “may well have legitimate reasons for wanting to keep investigations confidential,” she pointed out “it is also true that confidentiality requirements can protect employers whose investigations are unlawfully motivated, biased, or simply flawed. In those situations, confidentiality requirements let employers hide from employees, from unions, from the government, and from the public alike ongoing problems in their workplace and prevent employees from taking action to aid and protect themselves and their coworkers.”

“It should go without saying that we share our colleague’s deep indignation at such behavior,” the majority replied. “But we cannot agree with her that Banner Estrella is the remedy. While Banner Estrella may have increased the scrutiny of employers with ill intent, it also hobbled countless employers who have their employees’ welfare at heart and in whose hands a workplace investigation is an instrument of justice.”

The majority likewise rejected McFerran’s prediction that condoning investigative confidentiality rules will make it “‘virtually impossible’ for employees to seek the help of a Board agent or union representative about an allegation of misconduct.” According to the majority, “There is absolutely nothing in this decision that would allow an employer to infringe upon an employee’s Section 7 right to file a charge or complaint with the Board or with any other federal or state agency.”

Finally, McFerran rebuked the majority for its assertion that its decision here will reduce workplace discussions that amount to “idle gossip and chatter,” contending that it reflects “just how out of touch today’s decision is with the realities of the modern American workplace and with the goals of federal labor law. A female employee who wants to talk to her coworker about an investigation related to her ongoing sexual harassment complaint is not engaged in ‘gossip’; and a union-supporting employee falsely accused of misconduct who wants the help of his coworkers to save his job is not engaged in ‘chatter.’ American workers may wish to protect themselves instead of relying entirely on their employers for protection—and the National Labor Relations Act gives them that right.”

Why confidentiality matters.Banner Health had treated NLRA rights as sacrosanct, above the rights provided employees by other laws, and above the privacy rights of third parties,” according to Kisicki. “Those third parties include customers and—when the employer is a health care provider (as was the employer in Banner Health) subject to HIPAA obligations—patients.”

The Banner Health decision also “ignored the hundreds of years of experience with our legal system, which has long recognized that witnesses should not be permitted to hear or discuss the testimony of other witnesses, but instead should be sequestered until they testify, because hearing one person’s recollection can wittingly or unwittingly affect others’ testimony, which undermines the ability to ferret out the truth,” he continued. “Perhaps most ironically of all; Banner Health ignored how important the NLRB views confidentiality, as its own rule requires witness sequestration during adjudicative hearings by its administrative law judges.”

Striking a balance.Apogee Retail allows employers to have a general rule that requires employees to keep workplace investigations confidential while they are ongoing. While an investigation is going on, investigators are best able to ensure witness credibility and secure the full cooperation of witnesses,” Kisicki explained. “Such a rule also protects those employees who complain or who participate in the investigation against reprisal, such as an adverse employment decision of a supervisor or bullying and intimidation by other employees.”

“However, Apogee Retail recognizes that some of the reasons justifying confidentiality during an ongoing investigation do not apply once the investigation is complete. At that point, the truth-finding effort has been concluded, so employers no longer have a legitimate concern that was based on witness credibility. Yet the Board also recognized that specific directions to continue confidentiality after the investigation ends might be justified.” Finally, he observed, “the Board also noted that in some cases a general rule requiring post-investigation confidentiality might be appropriate, and suggested that might be the case ‘based on the nature of the employer’s business.’ Health care providers, for example, would likely be justified requiring confidentiality of any investigation regarding patient care, even after the investigation concludes.”

Guidance for employers. Banner Health had limited employers’ ability to require employees to maintain the confidentiality of ongoing investigations to the narrowest of situations, essentially requiring actual proof that violence was likely absent confidentiality,” according to Kisicki. The Obama-era decision “had put employers in shackles when they investigated issues in the workplace, regardless of how tangential NLRA issues or concerns might have been to the matter under investigation. Apogee Retail breaks the shackles, and gives employers a bright-line rule to apply without being second-guessed by NLRB agents who generally have never had to manage a workforce, investigate alleged wrongdoing by others in their own organization, and view employer rules through ‘the prism’ of their expertise; i.e., the NLRA.”

“While employers should take full advantage of the reasonable standard articulated in Apogee Retail to require confidentiality during ongoing investigations, any rule or directive that requires employees to continue the confidentiality obligation after the investigation ends must be carefully evaluated and should be adopted or given only where it has a significant legitimate justification,” Kisicki advised.

“Employers also need to be mindful that Boeing and its progeny, including Apogee Retail, apply only when evaluating whether adopting or maintaining a facially neutral rule violates the Act. Even neutral rules that are legal under the Boeing standard can be applied in a manner that would violate the Act, so employers must exercise judgment—with an eye on Section 7 of the NLRA—when they consider enforcing such rules.”

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