Applying the principles it has used primarily to evaluate handbook rules and personnel policies, the National Labor Relations Board has held that confidentiality and non-disparagement provisions contained in an employment agreement are unlawful under the National Labor Relations Act. Quicken Loans, Inc., 359 NLRB No. 141 (June 21, 2013).
The employer, which provides mortgage loan services, required its mortgage bankers to sign a “Mortgage Banker Employment Agreement.” The Agreement contained a provision about the use and disclosure of “Proprietary/Confidential information.” It included among such information:
…all personnel lists, rosters, personal information of co-workers, managers, executives and officers; handbooks, personnel files, personnel information such as home phone numbers, cell phone numbers, addresses and email addresses.
The Agreement also contained a non-disparagement provision:
Non-disparagement. The Company has internal procedures for complaints and disputes to be addressed and resolved. You agree that you will not (nor will you cause or cooperate with others 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 (including, but not limited to, any statements made via websites, blogs, postings to the internet, or emails and whether or not they are made anonymously or through the use of a pseudonym). You agree to provide full cooperation and assistance in assisting the Company to investigate such statements if the Company reasonably believes that you are the source of the statements. The foregoing does not apply to statutorily privileged statements made to governmental or law enforcement agencies.
Applying decisions in which it found similar language contained in handbook rules unlawful, the NLRB decided that both provisions violated the NLRA. The Board quoted the test used to evaluate rules set forth in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004):
Our inquiry into whether the maintenance of a challenged rule is unlawful begins with the issue of whether the rule explicitly restricts activities protected by Section 7. If it does, we will find the rule unlawful.
If the rule does not explicitly restrict activity protected by Section 7, the violation is dependent upon the showing of one of the following: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.
The NLRB particularly held that the provisions of the confidentiality section regarding “personnel information” explicitly restricted NLRA Section 7 protected concerted activities, such as employees discussing with others, including fellow employees or union representatives, their wages, benefits or contact information. The NLRB also found that employees would reasonably construe the entire non-disparagement provision as interfering with their right to engage in protected concerted activities, such as criticizing their employer and its products. It held unlawful language that restricts employees from “publicly criticiz[ing], ridicul[ing], disparag[ing] or defam[ing]” the company or its products. The Board noted, “Within certain limits, employees are allowed to criticize their employer and its products as part of their Section 7 rights….”
This case underscores that it is not only handbook rules and policies that are in the NLRB’s crosshairs. Any employer documents governing the relationship between an employer and its employees are potentially subject to NLRB scrutiny and a finding of unlawfulness. Employers should continue to scrutinize their rules and policies, but they also should consider reviewing other documents, such as performance evaluation forms, employment applications, and employment agreements, to ensure they do not run afoul of Board law.