The National Labor Relations Board has recently been issuing Administrative Orders enforcing rights on behalf of non-union employees, in previously unexpected ways; and now, a federal court of appeals has confirmed the extension of the broad reach by the Board.
In a decision that should prompt non-unionized employers to review, and potentially reconsider, the language used for their confidentiality policy with employees, the U.S. Fifth Circuit Court of Appeals (the “Court”) upheld a decision by the National Labor Relations Board (the “Board”) that Flex Frac Logistics, LLC’s (“Flex Frac”) confidentiality policy is an unfair labor practice in violation of the Section 8(a)(1) of the National Labor Relations Act (the “Act”). In its decision on the merits, the Court concluded that employees would reasonably construe Flex Frac’s confidentiality provision, which was contained within a document that Flex Frac required its employees to sign, to prohibit discussion of wages contrary to Section 7 of the Act, which protects such concerted activities amongst employees.
Flex Frac’s broadly worded confidentiality provision prohibited disclosure of “Confidential Information” that included “financial information” and “personnel information and documents.” Agreeing with the Board, the Court concluded that these descriptors can reasonably be understood to include wage information and therefore, prohibit employees from openly discussing wages amongst themselves. The Court rejected Flex Frac’s claim that employees did not actually interpret the provision to prohibit wage discussions, noting that the “actual practice of employees is not determinative” as to whether a policy violates Section 8(a)(1) of the Act.
This holding confirms the warning we have been issuing to our clients for some time now: all employers, whether unionized or not, should review the confidentiality language contained in employee handbooks, policies and agreements to ensure that the language utilized does not reference information that could be reasonably construed as wage information. We do not expect this court ruling to be the last precedent that will arise under the Obama-appointed National Labor Relations Board.