In Hyundai Am. Shipping v NLRB, No. 11-1351 (Nov. 6, 2015), the D.C. Circuit Court of Appeals recently enforced a Board order with respect to a work rule that prohibited employees from discussing matters under investigation by the employer, but refused to enforce the Board’s order with respect to a provision urging employees to make complaints to their immediate supervisors rather than to fellow employees. The court’s reasoning in Hyundai may benefit all employers seeking to expand the standards for the legality of requiring and suggesting confidentiality in internal investigations that were recently set forth by the Board in Banner Estrella Medical Center, 362 NLRB No. 137 (June 26, 2015).

The court in Hyundai found the employer’s investigative confidentiality rule clearly limited employees’ Section 7 rights to discuss their employment and that the rule was “so broad and undifferentiated that the Board reasonably concluded that [the employer] did not present a legitimate business justification for it.”  No. 11-1351 at 7. The court reasoned that the employer had not shown that its obligations to comply with antidiscrimination statutes and guidelines “offer[ed]  a legitimate business reason to ban discussions of all investigations, including ones unlikely to present these concerns.” Id. at 6. However, the court expressly declined to “endorse the ALJ’s  novel view that in order to demonstrate a legitimate and substantial justification for confidentiality, an employer must ‘determine whether in any given investigation witnesses need protection, evidence is in danger of being fabricated, and there is a need to prevent a cover up.’” Id. at 7. Instead, the court stated that it “agree[d] that an employer’s obligation to comply with [federal and state antidiscrimination statutes and] guidelines requiring confidentiality may often constitute a legitimate business justification for requiring confidentiality in the context of a particular investigation or particular types of investigations.” Id. at 6.

The employer’s handbook in Hyundai also included the following employee conduct provision: “Voice your complaints directly to your immediate superior or to Human Resources through our “open door” policy. Complaining to your fellow employees will not resolve problems. Constructive complaints communicated through the appropriate channels may help improve the workplace for all.” The court found that the handbook merely “urge[d] employees to voice their complaints to their supervisors or to Human Resources,”  and that “the language [wa]s neither mandatory nor preclusive of alternatives.” Id. at 9. Moreover, the court found that “the handbook d[id] not prescribe penalties for complaints to fellow employees.”  Id. at 10. Accordingly, the court concluded that “a reasonable employee would not read the provision, with its exhortatory language and lack of penalties, to prohibit complaints protected by Section 7.” Id.

This D. C. Circuit Court of Appeals case is significant because the “novel” ALJ’s view that the court refused to endorse was actually the standard “reaffirmed” by the Board in Banner Estrella Medical Center,  362 NLRB  No. 137,  sl. op. at 2-4. Following the court decision in Hyundai, it remains uncertain whether an employer will still be required to demonstrate on a case-by-case basis in any particular investigation whether the witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, and there is a need to prevent a cover up.  Rather, the court in Hyundai expressly recognized that an employer’s obligation to comply with antidiscrimination guidelines may often constitute a legitimate business justification for requiring confidentiality in the context of particular investigations or particular types of cases. Accordingly, it appears that this decision could provide the death knell to the novel, case-by-case approach used by the Board majority in Banner Estrella to determine the need for nondisclosure and may very well serve to  permit employers to adopt internal guidelines identifying particular types of investigations when employee-witnesses can or should be asked not to disclose details regarding investigative-meeting conversations, especially those investigations where federal and state antidiscrimination guidelines require confidentiality.

Further, this court decision also provides, contrary to the Board’s position in Banner Estrella, 362 NLRB No. 137, sl. op. at 4-5,  that exhortatory language and lack of penalties may save an employer’s rule. Accordingly, it appears this decision may provide a safe harbor to employers that merely request or suggest unaccompanied by any threat of discipline, as opposed to instruct or require under threat of discipline, nondisclosure of the of matters discussed in investigative meetings, especially where the request is limited in scope to the duration of the investigation and is limited to those types of investigations where there is some business need.