Seyfarth Synopsis: The Court of Appeals for the D.C. Circuit affirmed in part and rejected in part the National Labor Relations Boards’ Banner Estrella decision regarding an employer’s requirement of confidentiality during workplace investigations. In doing so, the Court did not address, and essentially left intact, both the Board’s prohibition of blanket confidentiality instructions, and its requirement that employers determine the need for confidentiality on a case-by-case basis.

Last Friday, a three-member panel of the U.S. Court of Appeals for the D.C. Circuit punted on the opportunity to rein in the National Labor Relations Board’s restrictions on the ability of an employer to ensure confidentiality when conducting internal investigations.

The case, Banner Health System v. NLRB, No. 15-1245 (D.C. Cir. Mar. 24, 2017), addressed the non-profit healthcare system’s appeal of the Board’s controversial Banner Estrella decision (originally decided in 2012 and reaffirmed upon remand following Noel Canning). There, the Board struck down as overbroad a confidentiality policy that prohibited employees from sharing salary and disciplinary information that had not been “shared” by the employee to whom it related. The Board also found that the company unlawfully maintained a categorical policy of asking employees during investigatory interviews not to discuss certain kinds of human resources investigations.

The Board did not stop there, however, and announced a new rule prohibiting employers from promulgating blanket rules barring employee discussions concerning ongoing investigations. Instead, the Board held that an employer may only prohibit discussions regarding ongoing investigations if it demonstrates on a case-by-case basis that it has a legitimate and substantial business justification that outweighs employees’ Section 7 rights. The employer must determine whether in any given investigation witnesses need protection, evidence is danger of being destroyed, testimony is in danger of being fabricated, and there was a need to prevent a cover up.

On appeal, the D.C. Circuit Court affirmed the Board’s finding that the Company’s confidentiality agreement unlawfully barred its workers from sharing information related to terms and conditions of employment. In this context, the Court deferred to the Board’s conclusion that the confidentiality agreement “struck at the heartland of Section 7 activity without adequate justification” and held that the Agreement expressly reached information about salaries and employee discipline, which “is the sort of overbreadth our precedents squarely forbid.” The Court also found the confidentiality agreement’s “safe harbor” provision, which allowed employees to discuss salary and discipline information when “shared by the employee,” too ambiguous to adequately protect employees’ right to share innocently obtained information.

However, the Court determined that the Board made “unwarranted logical leaps” and lacked substantial evidence to find that the Company unlawfully maintained a categorical policy of asking employees not to discuss certain kinds of human resources investigations. The only evidence supporting the Board’s finding was an investigative interview form instructing investigators to request that interviewees not discuss the investigation with coworkers, along with vague testimony from an HR representative regarding how and when the script was utilized. The Court held that this evidence did not establish whether the Company, in practice, categorically requested investigative nondisclosure in all investigations.

Because the dearth of evidence “doomed” the Board’s order as to the investigation, the Court did not reach the Company’s or the amici’s arguments that the Board failed to balance employees’ Section 7 rights against employers’ interests in nondisclosure of workplace investigations. Nor did it opine on the Board’s requirement of a case-by-case approach to justifying investigative confidentiality.

Takeaway

Despite the Court’s partial rejection of the Board’s Banner Estrella decision, the Board’s rules restricting employer’s use of routine confidentiality instructions during investigations remains the law of the land. Employers should, therefore, continue refraining from issuing blanket confidentiality policies when conducting investigations. Instead, employers must consider on a case-by-case basis whether confidentiality is truly needed, and only require confidentiality in those circumstances where it is reasonably required.