Court Finds Employer Policy Making Cost and Personnel Information Confidential Unlawful Under NLRA
May 28, 2014

The U.S. Court of Appeals for the Fifth Circuit (LA, MS, TX) has upheld a National Labor Relations Board (“NLRB”) finding that a nonunion trucking company’s confidentiality policy violates the National Labor Relations Act (“NLRA”).

The company required all of its employees to sign a confidentiality policy that prohibited the sharing, removal, and copying of “confidential information” without prior management approval.  The policy defined “confidential information” with a long list of items including information related to “our financial information, including costs, prices” and “personnel information and documents.”  The Board found that the policy was unlawful because employees could reasonably interpret it to prohibit discussing their salaries and wages with people outside the company, which is a right protected by the NLRA.  The court agreed.

The NLRB and court noted that use of the words “financial information, including costs” necessarily included wages and that the policy failed to contain any indication that personnel cost information, like wages, was excluded.  Furthermore, by specifically referencing “personnel information,” the company implicitly included wage information in the list of confidential information.

The court found unpersuasive company evidence that its employees did not in fact interpret the policy as restricting their rights to discuss wages.  What matters is whether employees “would reasonably construe” the disputed language as restricting the exercise of their rights, said the court, not whether employees actually have construed the rule that way.  Likewise, whether the rule is likely to have a chilling effect is determinative, not whether the employer has enforced the rule to restrict the exercise of employee rights.

The decision does not render all confidentiality policies unlawful.  The court acknowledged that the company here was free to remove the unlawful provisions of its policy and redraft to “maintain confidentiality of “employee-specific information like social security numbers, medical records, background criminal checks, drug tests, and other similar information.”  AGC members with confidentiality policies covering nonexempt employees should review their policies in light of the decision and consult with their labor counsel as needed.

Flex Frac Logistics, LLC v. NLRB, Case No. 12-60752 (5th Cir., 3/24/14).