Does your employee handbook inform employees that salary matters are confidential, or prohibit or limit discussions of compensation or other terms and conditions of employment with third parties or outside the workplace? If so, your policy likely violates the National Labor Relations Act (NLRA) and places you at risk for even maintaining, not to mention enforcing, the policy.

A federal appellate court, in Northeastern Land Servs. v. NLRB, recently reaffirmed that an overbroad confidentiality provision violated the NLRA because employees could reasonably construe the language to prohibit employees from engaging in protected activity with union representatives in violation of Section 7 of the NLRA. Section 7 guarantees employees the right to form, join, or assist unions; to refrain such activities; or, to engage in other concerted activities for their mutual aid and protection. The decision is important to all private employers because Section 7 protects all employees that engage in protected activity, regardless of whether the employees are represented by a union.

What Happened In This Case

Northeastern Land Services, Ltd. (NLS) is a temporary employment agency that supplies employees to clients in several industries. NLS required its employees to sign a temporary employment contract which stated in pertinent part, “Employee… understands that the terms of this employment, including compensation, are confidential to Employee and the NLS Group. Disclosure of these terms to other parties may constitute grounds for dismissal.”

NLS placed an employee, Dupuy, with EPE, a client. Dupuy reported to an EPE project manager. During his placement, Dupuy complained to NLS about repeated delays in receiving his paycheck and an issue related to reimbursement he received for work-related use of his personal computer. After trying to resolve the situation with NLS, Dupuy sent an e-mail to NLS, copying the EPE project manager, in which he stated he wanted EPE to resolve the reimbursement issue and he would no longer use his personal computer for work-related business until the situation was resolved. Dupuy also sent an e-mail to the EPE project manager and co-workers, stating he could not accept e-mail because his computer was offline. Subsequently, NLS terminated Dupuy for violating the confidentiality provision of his employment contract and for approaching a client with employment concerns.

The NLRB Decision

Dupuy filed an unfair labor practice charge with the NLRB. He alleged that the confidentiality clause in the employment contract unlawfully discouraged employees from engaging in protected concerted activities. The NLRB determined that the confidentiality provision was unlawful because it precluded employees from discussing compensation and other terms of employment with “other parties,” which could be reasonably construed to include union representatives. The NLRB found Dupuy’s termination was unlawful because “an employer’s imposition of discipline pursuant to an unlawfully overbroad policy or rule constitutes a violation of the Act.”

Court of Appeals: “A Cautionary Tale”

The opening sentence of the appellate court decision is instructive: “This case provides a cautionary tale for employers about the risk of maintaining and enforcing a broad confidentiality clause.” The decision confirmed and enforced existing NLRB caselaw that “mere maintenance” of a rule that “would reasonably tend to chill employees in the exercise of their rights” is unlawful, and there need be no evidence of “actual chilling activity” by an employer, such as enforcement of the rule by an employer, for liability to attach.

Recommended Employer Action

This case is another illustration and reminder of the impact and effect of the NLRA on non-unionized employees and employers. The NLRA protects employees not only from the application of unlawful policies, but also protects employees from an employer’s mere maintenance of policies or practices that discourage or prevent protected concerted activity, which can range from discussion of wage issues to union organizing activity. Employers should review relevant confidentiality policies and practices, regardless of whether the policy has ever been enforced, to ensure that you are not vulnerable to a “mere maintenance” NLRB unfair labor practice charge.