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Most businesses have trade secrets and a wide range of business practices and information that they want to keep confidential from the public and even from certain company employees. One of the ways employers try to preserve confidentiality is through personnel policies that restrict discussing sensitive company information with unauthorized people. What many employers might not realize, however, is that if a confidentiality policy is written too broadly, it risks violating the National Labor Relations Act. The NLRA was enacted in 1935, in large part to allow employees to join labor unions without employer interference (sometimes a problem in that era). Yet, as employers are discovering, its effect continues in today’s workplace — and even in those workplaces without unions. A recent decision from the U.S. Court of Appeals for the D.C. Circuit shows the risk of drafting policies that do not consider the rights of employees. If employers publish policies or draft agreements whose terms may be interpreted as illegally limiting employees’ rights under the NLRA, they may find themselves the subject of a charge of an unfair labor practice and a consequent investigation by an agent from the National Labor Relations Board. CONCERTED ACTIVITY To see how this can happen, let’s begin with the language of the act. Section 7 of the NLRA establishes employees’ basic rights. It states: “Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” This provides broad security from employer interference with employees engaging in what are known as “protected concerted activities.” A quick reading of the provision might suggest that it applies solely to employees who are trying to bring union representation to their workplaces. In fact, it applies more broadly. Section 7′s provision that “[e]mployees shall have the right . . . to engage in other concerted activities for the purpose of . . . other mutual aid or protection” has been interpreted by the NLRB and the courts to protect concerted activities by employees where there is not the faintest hint of a labor union. The ramifications of this interpretation become abundantly clear from a recent ruling on a confidentiality policy. The NLRB has long interpreted Section 7 as including, among employees’ protected concerted rights, the right to discuss the terms and conditions of their employment with other employees. In a decision issued on March 16, the D.C. Circuit emphatically supported the board by finding that a company’s “confidentiality” policy was written so broadly that, in application, it could have prohibited employees from discussing their pay and benefits among themselves — a clear violation of Section 7. Specifically, in Cintas Corp. v. NLRB, the employer, which supplies workplace uniforms and employs approximately 27,000 people at 350 facilities, maintained a broad confidentiality policy. The policy stated: “We honor confidentiality. We recognize and protect the confidentiality of any information concerning the company, its business plans, its partners [employees], new business efforts, customers, accounting and financial matters.” Because Cintas employees who violated this policy could be disciplined and even terminated, the D.C. Circuit decided that the employees could “reasonably” believe that they were putting their jobs at risk if, for example, they disclosed their pay rates to other employees. The court reached this conclusion even though there was no evidence that any employees had actually interpreted the policy in that manner or that Cintas had ever applied the policy that way. The court reasoned that because the policy made no effort to distinguish prohibited activities from those protected under Section 7 (such as by using qualifying language that made it clear to employees that they were allowed to discuss their pay and benefits), the policy was too broad and thus illegal. SHARING INFORMATION In reaching its decision, the D.C. Circuit relied in part on its prior decision in Brockton Hospital v. NLRB (2002). There, the court enforced an NLRB order invalidating a company policy that prohibited the sharing of “information concerning patients, associates [employees], or hospital operations.” That policy, the court said, was arguably even less restrictive than the Cintas policy, which prohibited sharing “any information” concerning employees. In Cintas, the D.C. Circuit further noted that it had also concluded in February, in Guardsmark v. NLRB (2007), that a ban on fraternization by co-employees could be reasonably interpreted by employees as a prohibition against exercising their Section 7 rights. Conversely, the court distinguished the Cintas rule from company rules that the NLRB had previously approved because they were “sufficiently limited by specific context or language as to be clear to employees that the rules did not restrict employees’ section 7 rights.” Among the permissible rules to which the court referred were ones that • banned discussion of “office business” at an ophthalmology center, where that phrase appeared at the end of a discussion of patient confidentiality;

• banned discussion of “policies and procedures” that did not include “information concerning �employees’ ” and followed a list of “ customer or marketing lists or strategies, financial information, computer files or programs, recipes [the employer, a hotel and casino, housed several restaurants] and personnel files”; • referred to “employee information” within a larger provision that prohibited disclosure of “proprietary information, including information assets and intellectual property” and listed the phrase as an example of “intellectual property”; • prohibited disclosure of “company business and documents” and did not include employee wages or working conditions or make any reference to employee information; and • banned discussion of “hotel-private” information that did not, on its face, cover employee wage discussion. NARROWLY DRAFTED This D.C. Circuit case reminds all employers that they must exercise care in drafting their policies and employee agreements. In particular, a confidentiality policy in a handbook or an employee agreement must be tailored so that employees cannot argue that it made them believe they were forbidden from talking about their terms and conditions of employment — in particular, their pay and benefits — with other employees or, in many cases, even with outsiders. Ideally, such confidentiality policies and provisions can be drafted narrowly and without broad or vague terms to which the NLRB and courts may apply a “reasonable interpretation,” as in Cintas, to find a purpose or effect never intended by the employer. At the least, companies should consider including a statement in any confidentiality policy that the policy is not intended to prevent employees from discussing their terms and conditions of employment with others to the extent permitted by law. Confidentiality is a legitimate employer concern. The right to maintain confidentiality is not, however, unlimited. In seeking to balance the needs of the business and the rights of employees, employers must take care that they do not infringe on the abilities of their workers to discuss their terms and conditions of employment, an ability protected under Section 7 of the NLRA.

Richard G. Vernon chairs the employment and labor group at Lerch, Early & Brewer in Bethesda, Md. He represents management in all matters concerning the workplace. Anne B. Fox is an associate with the firm who previously clerked with the Supreme Court of North Carolina.

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