A company that provides wheelchair accessible van transportation services to clients, including the Department of Veterans Affairs, got into trouble when it required employees to sign a confidentiality agreement that the NLRB found interfered with employees’ protected rights. The company was ordered to rescind the unlawful portions of the agreement and notify all employees that the agreement and related confidentiality policies will not be enforced.

A Confidentiality Agreement That’s Not Unusual

This company was in the middle of contract negotiations with the union. Before the contract expired, some of the drivers had advised the Department of Veterans Affairs that they would not be transporting patients if there was no contract. This information was incorrect and the company responded, reassuring its clients and warning employees of their obligations under the confidentiality agreement that they all had signed.

Here is what the agreement provided, which is not at all that unusual:

The Employee acknowledges that, in the course of employment by the Employer, the Employee has, and may in the future, come into the possession of certain confidential information belonging to the employer including but not limited to human resources related information, drug and alcohol screening results, personal/bereavement/family leave information, insurance/worker’s compensation, customer lists (address, telephone number, medical/health related), investigations by outside agencies (formal and informal), financial, supplier lists and prices, fee/pricing schedules, methods, processes or marketing plans.

The Employee hereby covenants and agrees that he or she will at no time, during or after the term of employment, use for his or her own benefit or the benefit of others, or disclose or divulge to others, any such confidential information.

The company memo reminding employees of the agreement was further trouble, according to the NLRB:

We were contacted this morning by the Front Office staff at the VA Medical Center. They wanted to report that Battle’s Drivers notified clients that they were transporting that Thursday was the last day of our contract. They interpreted it that it was the last day we would be transporting them. It is important to correct this miscommunication and to advise all drivers that you are not to communicate any Battle’s company business with our clients. If there is information to communicate, the management staff will handle these matters. (Emphasis in original memo)

When Is a Confidentiality Agreement Unlawful?

Whether or not a union is involved (as it was in this case), employees of private employers have the legally protected right to engage in concerted activity for their mutual aid and protection – especially when it concerns wages, hours and other terms and conditions of employment. An employer violates federal labor law when it maintains a work rule that reasonably tends to chill employees’ exercise of their protected rights. Even if there is no outright prohibition of protected activity, the NLRB has held that a rule, policy or agreement can be found to be unlawful if: (1) employees would reasonably construe the language to prohibit protected activity; (2) the rule was promulgated in response to protected activity; or (3) the rule has been applied to restrict the exercise of protected rights.

In applying the law to the terms of the confidentiality agreement, contrary to the administrative law judge who found no violation, the NLRB found the confidentiality agreement to be overbroad to the extent that it bars employees from discussing “human resources related information” and “investigations by outside agencies.” According to the NLRB, employees would reasonably construe those phrases to encompass terms and conditions of employment or to restrict employees from discussing protected activity such as NLRB complaints or investigations.

Further, the portion of the confidentiality agreement that prohibits employees from using such information “for his or her own benefit or the benefit of others” would, according the NLRB, reasonably be construed to limit protected concerted activity.

Finally, in applying the law to the terms of the company memo, the NLRB found that that the prohibition against employees discussing “any Battle’s company business with our clients” is unlawfully vague and overbroad. Employees would reasonably construe this prohibition to restrict discussion about union-related matters, including the expiration of their collective bargaining agreement.

What This Means for Private Employers

This decision is one of many that should be a wake-up call to employers who attempt to restrict employees in the use of confidential company information in a way that could reasonably be interpreted to limit employee exercise of protected rights. See our previous HR Insights Blogs dealing with confidential information. It’s hard to know exactly where that line is and sometimes it depends on the makeup of the NLRB deciding the case. Nevertheless, employers should carefully review existing rules, policies and agreements to make sure that they are not too broad to get you in trouble with the NLRB.

Reference: Battle’s Transportation, Inc. (NLRB, February 24, 2015)