In a case with potentially far-reaching implications, the National Labor Relations Board has issued a decision invalidating a confidentiality policy similar to that applied by many employers during workplace investigations.  Banner Health System d/b/a Banner Estrella Medical Center, 362 NLRB No. 137 (June 26, 2015).  The decision recapitulates a 2012 Board determination (discussed here) which was rendered invalid by the Supreme Court’s holding in NLRB v. Noel Canning in 2014.

The Decision

In Banner Health, a Board panel majority concluded that an “Interview of Complainant” form used by the employer in conducting workplace investigations violated employees’ Section 7 rights under the National Labor Relations Act by requesting interviewees not to discuss the matter with their coworkers while the investigation was continuing.  The interview form’s introduction for all interviews directed the investigator to advise all interviewees that their conversation was confidential and that they should not discuss the conversation with their coworkers while the investigation was ongoing, because “when people are talking, it is difficult to do a fair investigation and separate facts from rumors.”  The form further advised the investigator to notify interviewees that “any attempt to influence the outcome of the investigation, any retaliation against anyone who participates, any provision of false information or failure to be forthcoming can be the basis for corrective action up to and including termination.”

At the unfair labor practice hearing, the employer’s human resources representative testified that she had given the prescribed confidentiality instructions on at least six occasions during her 13-month tenure and that she made those requests based on the type of investigation she was conducting, citing as examples sexual harassment cases and cases involving “sensitive situations” like hostile work environment or allegations of abuse.

In his decision, the NLRB’s Administrative Law Judge Jay Pollack found that the employer’s use of the confidentiality form was intended to “protect the integrity of the investigation” and was “analogous to the sequestration rule so that employees give their own version of the facts and not what they heard another say. I find that Respondent has a legitimate business reason for making this suggestion.  Accordingly, I find no violation.”

On appeal, the Board majority rejected the ALJ’s findings:

Employees have a Section 7 right to discuss discipline or ongoing disciplinary investigations involving themselves or coworkers.  Such discussions are vital to employees’ ability to aid one another in addressing employment terms and conditions with their employer. See generally, Fresh and Easy Neighborhood Market, 361 NLRB No. 12, slip op. at 5-6 (2014).  Accordingly, an employer may restrict those discussions only where the employer shows that it has a legitimate and substantial business justification that outweighs employees’ Section 7 rights.Hyundai America Shipping Agency, 357 NLRB No. 80, slip op. at 15 (2011). InHyundai, the Board reaffirmed that it is the employer’s responsibility to first determine whether in any given investigation 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. Only if the [employer] determines that such a corruption of its investigation would likely occur without confidentiality is the [employer] then free to prohibit its employees from discussing these matters among themselves.

The majority reasoned that its decision here was consistent with Caesars Palace, 336 NLRB 271 (2001), and other cases in which it upheld the application of a similar confidentiality rule, but under different circumstances.  There the investigation involved allegations of illegal drug activity in the workplace.  The employer argued its confidentiality rule was necessary to insure that witnesses were not put in danger, that evidence was not destroyed, and that testimony was not fabricated.  In Banner Health, the majority thought the evidence in Caesars Palace, in contrast to the case before it, established a legitimate and substantial justification for the rule which outweighed the employees’ Section 7 rights. The Board also relied on Phoenix Transit Systems, 337 NLRB 510 (2002), to support its argument that it simply was following well-established precedent.  In that case, the Board invalidated a confidentiality rule that prohibited employees from discussing their sexual harassment complaints among themselves where the evidence established that the employer had attempted to invoke the rule in a case which had been closed for some time.

In a vigorous and lengthy dissent, Member Miscimarra pointed out that there was no evidence that employee Navarro had ever received the confidentiality request or that he was in any way dissuaded from discussing with coworkers any concerns he had about potential discipline or any ongoing investigation.  Nor, he noted, was there any evidence: “(1) that the request prevented an employee from discussing anything with a union representative, or that there was a denial of Weingarten representation in the investigation meeting; (2) that the request targeted, prevented or penalized specific NLRA-protected concerted activity that actually occurred; or (3) that discipline was imposed based on disclosures involving actual protected concerted activity.”

Where Do We Go From Here?

Employers who wish to protect the confidentiality of workplace investigations need to proceed very carefully.  Although Caesars Palace  should not be read to suggest that the grave circumstances there present “any kind of a threshold to finding employer requests for confidentiality permissible,” as the Board itself recognizes,  Banner Health comes very close to making generally applicable confidentiality policies unlawful per se.  At the least, there now appears to be a presumption that such confidentiality policies are unlawful, even where there is no evidence that application of the policy has actually affected the exercise of such rights.

The burden clearly is on the employer, according to the NLRB, to make a compelling case that the special needs of a particular investigation require confidentiality that trumps the employees’ statutory right to discuss workplace issues of mutual concern.  There appear to be no categories of investigation that are presumptively appropriate for confidentiality.  Even sexual harassment investigations and investigations related to possible criminal activity are not excepted from the Board’s decision, even though a reasonable employer might very well think they should be.  Rather, the employer must show in a particular case that there are “objectively reasonable grounds for believing that the integrity of the investigation will be compromised without confidentiality” and that “feared consequences would likely occur without confidentiality.”  More specifically, under Hyundai and Banner Health the employer apparently will have to show all of the following to avoid an unfair labor practice finding:

  1. Witnesses need protection;
  2. Evidence is in danger of being destroyed;
  3. Testimony is in danger of being fabricated; 
  4. There is a need to prevent a cover up; and
  5. A corruption of the investigation would likely occur without confidentiality.

No great prescience is needed to recognize that the Board’s decision in Banner Healthwill complicate employer investigations of workplace misconduct.  Those involving asserted harassment and other alleged fair employment practice policy violations are especially susceptible, as they become fraught with greater risk.  Making no allowance for the confidentiality of workplace investigations that are inherently sensitive in the service of an abstract right of open discourse, the Board may be seen as giving too little consideration to the harm resulting to individual employees and employers from the spread of possibly false and scurrilous accusations.  The Board’s reflexive elevation of Section 7 rights, as it sees them, above all other legitimate interests, will seem improvident to many.