Tag Archives: confidential

“We Recommend Keeping This Confidential” Still Violates the Law According to the NLRB

Contributed by Jamie Kauther

Over the last few years the National Labor Relations Board (“NLRB”) has been cracking down on employee confidentiality mandates. An employer can legally require employees to keep trade secrets and legally protected information confidential, but according to the NLRB’s most recent ruling on August 27, 2015 an employer cannot even “recommend” that employees keep internal investigations confidential  (Boeing Co., 362 N.L.R.B. No. 195, 8/27/2015). The Board ruled that Boeing Company’s revised policy that “recommends” employees refrain from discussing HR investigations was unlawful as it violates employee’s rights to engage in concerted activity under Section 7 of the National Labor Relations Act (“NLRA”).

Confidential StampThe Board explained that although employers may “legitimately require confidentiality in appropriate circumstances” the impact of any confidentiality policy must be limited. Essentially, the Board created an individualized balancing approach that requires an employer to weigh its interests in confidentiality against employees’ Section 7 rights. Although it laid out examples of what situations would tip the scales, the Board did not set a clear standard. The examples provided include instances of likely witness intimidation or harassment, destruction of evidence or other misconduct that could jeopardize the investigation’s integrity. However, no specific examples were provided as to when these issues can occur. This standard imparts on employers a requirement to tailor-fit their confidentiality policies to be enforced on a case-by-case basis. As the Board explained, “generalized concern” about the integrity of all investigations is “insufficient to justify [a] sweeping policy,” including one that simply “recommends” confidentiality.

This new individualized balancing standard is a bit of a head scratcher. However, the Board did identify some bad practices that would not pass muster. It expressly pointed out Boeing’s requirement to have employees sign a policy notice without a Section 7 disclaimer in the policy or notice that the employee could disregard the confidentiality recommendation. The Board held that this clearly communicated Boeing’s improper desire for confidentiality.

So what is a best practice in light of this decision? Remove sweeping confidentiality policies pertaining to internal investigations and eliminate requirements that when employees sign notices they understand the confidentiality recommended. Instead, discuss with the employee during an investigation the desire for confidentiality based on the facts of the specific investigation. Remember this ruling only applies to what limits can be placed on employees with knowledge of the investigation. It has no bearing on a company’s approach or handling of an investigation – meaning the company can and should still clearly reiterate in its policies that it will handle all investigations with discretion and will preserve the confidentiality of all involved persons to the extent possible. Essentially, an employer can still control the information it relays, just not what other involved employees communicate.

Employer Beware! Confidentiality and Integrity of Workplace Investigations At Risk

Contributed by Beverly Alfon

Whether you are operating with a union workforce or non-union workforce – this warning applies to you. When an employee engages in misconduct, most employers prudently begin an investigation before meting out discipline. These investigations often involve speaking to the alleged offender and other potential witnesses.  In the interest of protecting the integrity of the process, employers routinely ask the interviewees to refrain from speaking with others regarding the investigation or any related matters while the investigation is pending.  The National Labor Relations Board has found that this routine request is unlawful.    

In Banner Health System, d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (July 30, 2012), an employer’s HR consultant read from a prepared script on an “Interview of Complainant” form that the employer regularly used to begin investigatory interviews of employees. One of the standard statements instructed the witness that s/he was prohibited from discussing matters related to the investigation until the investigation was complete.  The Board found this directive to be a violation of the National Labor Relations Act.  It reasoned that the uniform directive “had a reasonable tendency to coerce employees, and so constituted an unlawful restraint of Section 7 rights” to engage in protected concerted activity.   The employer should have first determined whether or not it had “a legitimate business justification that outweighs employees’ Section 7 rights.”  The Board’s disapproval was focused on the employer’s “blanket approach” of imposing the confidentiality restriction for every investigatory interview.  Instead, the Board explained that an employer must make a determination, on a case-by-case basis:  “(i) whether witnesses [need] protection; (ii) evidence [is] in danger of being destroyed; (iii) testimony [is] in danger of being fabricated; or (iv) there [is] a need to prevent a cover-up.”  If one or more of these conditions exist, then an employer will have a stronger basis to argue that its interest in protecting the integrity of the investigation outweighs the employees’ Section 7 rights.

So, now what?  Review your investigation policies, procedures and forms. They may need to be tweaked to remove any language that may be interpreted as creating a blanket prohibition against the discussion of workplace investigations among employees.  Also, consider the inclusion of a four-point checklist on investigatory forms/documents to document a case-by-case consideration of the Board’s factors – before issuing a confidentiality directive to a witness.  Where a confidentiality directive would not be appropriate, “blitz” interviews or sequestering witnesses may be an option to preserve the integrity of the investigation.

Chicago Federal Case Underscores Importance of Confidentiality Agreements

Contributed by Jeff Glass

Many employers use confidentiality agreements with their employees or business partners.  Most have confidentiality clauses in their employee handbooks. Yet, when faced with unfair competition, companies often mistakenly think that, if they do not also have non-compete agreements, they cannot protect themselves. A recent federal court decision from Chicago highlights why this view is mistaken.  Nortek Products (Taicang) Ltd., et al. v. FNA Group, Inc., 2012 U.S. Dist. LEXIS 4943 (N.D. Ill. Jan. 17, 2012).

The plaintiff in Nortek was a manufacturer that contracted with the defendants to make pressure washers for distribution. The defendants failed to pay for $3 million of product. The plaintiff sued.  The defendants counterclaimed for breach of a confidentiality agreement. The agreement barred the plaintiff’s managing director from using “confidential information” for any purpose other than the joint venture. It applied to drawings, analyses, formulas, data, technology, “know-how,” and other information provided by the defendants.  The defendants claimed that the plaintiff previously knew nothing about pressure washers and that, after they provided information for the joint project, the plaintiff used the information to start a competing venture.  

The plaintiff moved to dismiss, arguing that the agreement was overbroad and failed to specify what information was “confidential.”  The court denied the motion. It reasoned that the agreement listed categories of information that are generally deemed proprietary, and that certain information was specifically identified as “confidential” at the time of disclosure.  The plaintiff’s managing director also agreed to the definition of “confidential information” when she signed the agreement.  The court held that, to prevail on the merits, the defendants would need to show that the information was in fact kept confidential.  The court noted, however, that they did not need to show that the information rose to the level of a “trade secret.” 

Nortek Products demonstrates the benefits of a well-drafted confidentiality agreement.  Although the case involved a motion to dismiss rather than a trial on the merits, often that is a distinction without a difference.  Discovery is expensive.  Litigants often come to the settlement table when faced with that cost, even if they think they could win at trial.