Both the confidentiality and non-disparagement provisions of an employment agreement required by Quicken Loans are unlawful under the National Labor Relations Act, the National Labor Relations Board recently held.

Detroit-based Quicken required all of its mortgage bankers to sign an employment agreement, two provisions of which were addressed by the Board. Under the “Non-disparagement” section, the brokers were not allowed to “publicly criticize, ridicule, disparage or defame the Company or its products, services, policies, directors, officers, shareholders, or employees, with or through any written or oral statement or image.”

The “Proprietary/Confidential Information” section contained a laundry list of items – including “all personnel lists, rosters, personal information of co-workers” as well as handbooks, personnel files, personnel information such as home phone numbers, cell phone numbers, addresses, and e-mail addresses – employees agreed to hold and maintain “in the strictest of confidence” and not “disclose, reveal or expose.”

Phoenix broker Lydia Garza resigned her position after five years of employment and received a letter in the mail from Quicken reminding her of the “continuing obligations” she had agreed to in her employment contract, particularly the two provisions at issue. Garza responded with an unfair labor charge with the NLRB, alleging that her former employer maintained overly broad and discriminatory rules in violation of Section 8(a)(1) of the NLRA.

An administrative law judge agreed, finding that the employment agreement unlawfully restricted Quicken’s mortgage brokers from exercising their Section 7 rights. Referring to the Proprietary/Confidential Information provision, he noted that by “complying with these restrictions, employees would not be permitted to discuss with others, including their fellow employees or union representatives, the wages and other benefits that they receive, the names, wages, benefits, addresses or telephone numbers of other employees.”

“There can be no doubt that these restrictions would substantially hinder employees in the exercise of their Section 7 rights,” he concluded.

Turning to the Non-disparagement section, the ALJ found that a “reasonable employee could conclude that the prohibitions contained in the agreement” would restrict his or her rights to criticize the employer and its products, which employees are allowed to do within certain limits.

The Board affirmed the ALJ, recommending that Quicken rescind the entire Non-disparagement provision. As for the Proprietary/Confidential section, the Board also agreed the provision should be rescinded, but took a moment to frown upon Quicken’s broad definition of such information. “The Board has found that rules prohibiting employees from disclosing this type of information about employees violate Section 8(a)(1) of the Act,” it noted.

The Board ordered the company to reprint corrected versions of the agreement, but allowed it to save on expenses by using a handbook insert for existing employees until a new version of the agreement is printed, as well as to post notice about employees’ rights under the NLRA.

To read the Board’s decision in Quicken Loans, click here.

Why it matters: As demonstrated by the Quicken Loans decision, the Board continues its aggressive efforts on behalf of employees by casting a critical eye on all employer documents – not just handbooks and policy statements, but employment agreements as well. Whether reviewing courts will uphold the Board’s decision remains to be seen. In the meantime, employers would be well served to review all of their documents to determine whether they are compliant with recent Board rulings, particularly with an eye toward crafting a confidentiality policy within the permissible scope of Section 8 of the NLRA.