Today’s business data is more at risk than ever. As such, confidentiality clauses are increasingly com- mon. Combine a dispute over just such a clausewith a disagreement over an employee’s labor rights and you’ve got the recent case of Flex Frac Logistics, LLC v. NLRB.

Clash over a clause

Flex Frac Logistics LLC, a nonunion trucking company, required its employees to sign a confidentiality clause. The clause stated in part that confidential information is that related to the company’s “financial information, including costs, prices … personnel information and documents.” Workers were forbidden from sharing confi- dential information outside the organization and warned that anyone who did so could be terminated and possibly subject to legal action.

Flex Frac fired an employee for violating this clause. In turn, the employee filed a charge with the National Labor Relations Board (NLRB) alleging that, by terminating her for violating the confidentiality clause, the company unlawfully interfered with and restrained her exercise of rights protected by Section 7 of the National Labor Relations Act (NLRA). Sec. 7 provides for an employee’s right to self-organize and collectively bargain or refrain from doing the same.

The NLRB then issued a complaint alleging that Flex Frac maintained a rule prohibit- ing employees from discussing employee wages in violation of Section 8(a)(1) of the NLRA.Sec. 8(a)(1) provides that it’s an unfair labor prac- tice for an employer to interfere with, restrain or coerce employees in the exercise of their Sec. 7 rights.

The NLRB found that, even though there was no reference to wages in the confidentiality clause, the clause still violated Sec. 8(a)(1) because it contained language that could reasonably be construed by employ- ees as restricting their Sec. 7 rights. Flex Frac filed a peti- tion for review with the U.S. Court of Appeals for the Fifth Circuit, seeking that the decision be reversed.

One could construe

The Fifth Circuit had previously held that workplace rules that forbid discussion of confidential wage informa- tion between employees clearly violate Sec. 8(a)(1). The issue in this matter was whether the confidentiality clause signed by Flex Frac employees actually prohibited that kind of wage discussion.

The court considered the NLRB’s decision in Lutheran Heritage Village–Livonia. Here, the NLRB held that, when a rule doesn’t explicitly violate Sec. 8(a)(1), it will still be considered a violation if employees could reason- ably construe the language to prohibit Sec. 7 rights.

In light of this, the Fifth Circuit affirmed the NLRB’s decision, acknowledging that the policy didn’t explicitly prohibit employee discussion of wages. But an employee could reasonably construe the prohibition on sharing company “financial information” and “personnel information” as applying to wages. The court determined that, because discussion of wages among employees is protected by the NLRA to allow employees to try to improve working conditions, Flex Frac’s policy violated the Act — even though it was a nonunion employer.

An apt demonstration

This case aptly demonstrates that all employers — even nonunion ones — should review their current policies to determine whether they’re in compliance with the NLRA. It’s important to avoid violations of employees’ protected  Sec. 7 rights, or even the potential of being con- strued to violate them.