The National Labor Relations Board (the “Board”) recently issued a surprising decision that has important ramifications for internal investigations conducted by employers. In Banner Health System d/b/a Banner Estrella Medical Center, 358 N.L.R.B. No. 93 (July 30, 2012), the Board found unlawful the common practice by employers of requesting that an employee witness in an investigation not discuss the matter with other employees pending the completion of the investigation. Although the verbal instruction—which the employer provided to all employees involved in an investigation—was not accompanied by any threat of disciplinary consequences for its violation, the Board held that the request constituted an impermissible restraint on employees’ right to engage in protected concerted action under Section 7 of the National Labor Relations Act. As such, the Board issued an order requiring the employer to cease and desist from “[m]aintaining or enforcing the rule that employees may not discuss with each other ongoing investigations of employee misconduct” and to post a notice stating the same. Banner Health System, 358 NLRB No. 93 (Slip Opinion at 3).

The underlying investigation involved an employee who alleged that his negative performance review was in retaliation for his refusal to follow his supervisor’s improper instructions. In interviewing the employee, a human resources manager utilized a standard interview form wherein the employee was given the following verbal instruction:

This is a confidential interview and I will keep our discussion confidential except as required by law, or [Company] policy or as necessary to conduct this investigation. I ask you not to discuss this with your coworkers while the investigation is going on, for this reason: when people are talking it is difficult to do a fair investigation and separate facts from rumor.

A copy of the form was not provided to the employee.

For reasons apart from this instruction and not relevant to this note, the employee subsequently filed a claim with the NLRB alleging that Banner Health System committed certain violations of Section 8(a)(1) of the National Labor Relations Act, which prohibits employers from interfering, restraining, or coercing employees’ enjoyment of their Section 7 rights. The Board issued a complaint and notice which was subsequently amended to address the verbal confidentiality instruction.

Following a hearing on the complaint, the Administrative Law Judge upheld the verbal confidentiality instruction, finding that the employer had a “legitimate business reason for making this suggestion.” Id. at 6 (emphasis added). Specifically, the hearing judge recognized that the purpose of the “suggestion” was “to protect the integrity of the investigation.” Id.

On appeal, the Board reversed in a 2-1 decision. The Board found that the employer’s “blanket” (rather than case-by-case) approach of instructing all employee witnesses in an investigation to maintain confidentiality was an impermissible restraint on the employees’ Section 7 rights. The Board explained that an employer’s “generalized concern with protecting the integrity of its investigations is insufficient to outweigh employees’ Section 7 rights” to engage in concerted action for mutual aid and protection. Id. at 2.

Moreover, it was of no consequence to the Board that the instruction was merely a request. Nor did it matter that the request was not accompanied by an express threat of discipline for violation of the request. In the Board’s view, “[h]owever characterized, [the instruction], viewed in context, had a reasonable tendency to coerce employees, and so constituted an unlawful restraint....” Id.

In reaching this decision, the Board announced that, for a confidentiality instruction to be valid, an employer must first assess whether the instruction is necessary given the circumstances of the specific situation. In making that determination, the employer should consider the following non-exhaustive factors:

  1. “[W]hether in any give[n] investigation witnesses need[] protection”;
  2. Whether “evidence [is] in danger of being destroyed”;
  3. Whether “testimony [is] in danger of being fabricated”;
  4. Whether “there [is] a need to prevent a cover up.”

Employers conducting internal investigations of complaints and alleged misconduct have routinely issued confidentiality instructions for purposes of preserving the integrity of the investigation. Pursuant to this ruling—which applies to both union and non-union workplaces—such confidentiality instructions violate Section 8(a)(1) unless the instruction is narrowly tailored to the specific situation.

A strict interpretation of the Board’s decision would prove difficult to implement. Oftentimes, an understanding of the facts necessary to fully contemplate the considerations listed by the Board is impossible without at least some investigation. By the time that sufficient facts have been gathered to support a confidentiality instruction, the investigation may have already been tainted by behavior that would have been prevented by the earlier issuance of an instruction. The Board, however, would have no reason to promulgate an unworkable rule. This suggests that the Board, though uncomfortable with blanket confidentiality restrictions, views instructions appropriate so long as grounded in a reasonable basis that is specific to the matter under investigation. In other words, employers should utilize confidentiality instructions only after identifying specific concerns that make such an instruction appropriate.

With this understanding in mind, employers should revisit their internal policies and procedures governing (and agreements applicable to) internal investigations. Policies and procedures should be updated if necessary to implement a formal company policy regarding the issuance of confidentiality instructions. The policy should specifically address each of the four considerations identified above and require the individual undertaking the investigation to specifically list the facts at issue that justify the instruction prior to issuing the instruction. This record should be maintained in the event of subsequent litigation.