The National Labor Relations Board (“NLRB”) has recently taken the position that two extremely common employer practices violate the rights of employees under Section 7 of the National Labor Relations Act (“NLRA”). Virtually all employer handbooks contain a provision which states that its employees are employed “at-will,” meaning that their employment can be terminated at any time for any lawful reason. Similarly, employers typically have a provision in their handbooks that any investigation conducted into an employee complaint will be kept confidential to the extent possible. Indeed, these policies have long been considered a deterrent, rather than a source of, potential liability, and to be necessary for employer protection against claims of contractual rights by employees (in the case of at-will language) or claims of discrimination, retaliation, or harassment (in the case of confidential investigations).

Section 7 of the National Labor Relations Act provides all employees, both union and non-union, with the right to “self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Encompassed in this right is the ability of employees to discuss the terms and conditions of their employment. This section of the NLRA has been the source of much recent NLRB activity, particularly in the realm of social media, and the NLRB appears to be expanding its Section 7 enforcement efforts into the realms of confidentiality directives and at-will disclaimers.

On July 30, 2012, the NLRB issued Banner Health System d/b/a Banner Estrella Medical Center, 358 NLRB 93 (2012), which held that an employer may not maintain a blanket policy forbidding employees from discussing ongoing investigations of employee misconduct. The charge stemmed from an employee’s complaint and refusal to follow certain surgical tool sterilization procedures, and the ensuing performance coaching he received. In the course of investigating the employee’s complaint regarding the sterilization procedures, the human resources consultant requested, as she routinely did, that the employee not discuss the complaint and investigation with other employees. The Board held that this request was unlawful. According to the Board, a generalized concern with protecting the integrity of the investigation did not outweigh the employee’s Section 7 rights. Instead, the Board found that to minimize the impact on Section 7 rights, before requiring confidentiality, an employer must first determine whether an investigation witness needed protection, if any evidence was in danger of being destroyed, any testimony in danger of being fabricated, or if there was a need to prevent cover-up. In short, confidentiality should not be the default.

At-will disclaimers in employment handbook have also come under NLRB scrutiny. In two recent cases, the Acting General Counsel has claimed that employers’ at-will language infringes on employee Section 7 rights. On February 1, 2012, an administrative law judge found that the American Red Cross – Arizona Blood Services Region’s employment manual (which stated that the at-will relationship couldn’t be amended, modified or altered) violated Section 7 because it could discourage employees from organizing to challenge their at-will status. American Red Cross Arizona Blood Services Region, Case 28-CA-23443. Following this decision, the Acting General Counsel issued a complaint in a case against Hyatt Hotels Corp., Case 28-CA-061114, alleging that the hotel’s at-will statement, which advised employees that the only way to alter their at-will status was through a signed writing between the employee and either Hyatt’s executive vice president or president, violated Section 7. The case settled prior to decision on May 24, 2012.

These decisions leave no doubt that the NLRB is extending its Section 7 enforcement efforts beyond social media policies into “conventional” employer policies. Accordingly, employers should carefully consider if and how these policies should be revised and worded in light of this initiative. It may be that employers elect to include language explicitly stating that confidentiality will be required as necessary, and that the at-will disclaimer does not affect Section 7 rights. Whatever course an employer chooses to take, it must be aware of both the Section 7 risks and the risks of not requiring confidentiality or an at-will disclaimer and balance as appropriate.