Continuing its focus on confidentiality provisions, an Administrative Law Judge of the National Labor Relations Board struck a confidentiality provision from American Red Cross Blood Services’ employment agreement, finding that the company’s policy was overbroad and infringed upon the rights of employees under Section 7 of the National Labor Relations Act.
The case challenged several American Red Cross rules and policies, including those addressing confidentiality, found in the “Confidential Information and Intellectual Property Agreement” or CIIPA, the employee handbook, and the code of conduct.
The CIIPA defined “confidential information” as information relating to a broad variety of categories, including Red Cross’s financial, regulatory, personnel or operational matters, clients, customers, suppliers, and donors. Employees agreed not to “use or disclose, for my benefit or others’ benefit, either during or after employment any confidential information.”
A savings clause was included, which added, “I acknowledge and agree that this agreement does not deny any rights provided under the National Labor Relations Act to engage in concerted activity, including but not limited to collective bargaining.”
Facing a challenge that the CIIPA facially violated employees’ rights, the Red Cross argued that the confidentiality provisions should be read in the context of the entire document as well as the handbook and code of conduct. Read as a whole, employees would not believe their rights were limited because the “overall thrust” of the CIIPA focused on the ownership and disclosure of intellectual property, the employer said.
But ALJ Mark Carissimi struck the provision, finding that the broad definitions in the CIIPA “would be reasonably understood by employees to prohibit the disclosure of information including wages and terms and conditions of employment to other employees or to nonemployees, such as union representatives.”
As it is clearly established that employees have a Section 7 right to discuss wages and terms and conditions of employment among themselves and with individuals outside of their employer, Carissimi
found the confidentiality provision facially overbroad.
Significantly, the ALJ found that the savings clause was essentially useless, as employers are not permitted to specifically prohibit protected employee activity and then “seek to escape the consequences of the specific prohibition by a general reference to rights protected by law.”
“[S]uch a disclaimer does not make lawful the content of a provision that unlawfully prohibits Section 7 activity,” he wrote. The savings clause “arguably would cancel the unlawfully broad language, but only if employees are knowledgeable enough to know that the Act permits employees to discuss terms and conditions of employment with each other and individuals outside of their employer.”
Carissimi said employees would “decide to comply with the [Red Cross’s] unlawfully broad restriction on their Section 7 rights, rather than undertaking the task of determining the exact nature of those rights and
then attempting to assert those rights under the savings clause.”
Because the CIIPA, the employee handbook, and the code of conduct overlap – and the other two documents did not define “confidentiality” differently – Carissimi found all of them to be facially overbroad and in violation of the NLRA.
He ordered the Red Cross to immediately cease and desist from maintaining the confidentiality provisions, provide all employees with inserts for the rescinded unlawful rules or publish and distribute the documents without the unlawful rules included, and provide notice to employees of the changes, both via postings and electronically.
To read the decision in American Red Cross Blood Services, click here.
Why it matters: The ALJ’s decision is the latest in a line of cases from the Board addressing confidentiality provisions. Last year the Board held, in Banner Health Systems, that a company violated the NLRA by imposing a policy requiring confidentiality from all employees as a matter of course during internal investigations. That decision was followed by an Advice Memorandum from the NLRB’s Office of the General Counsel earlier this year to Verso Paper, which declared that employers may not maintain a blanket rule requiring confidentiality during employee investigations. The language struck down in this decision is relatively common language utilized in the corporate world to protect against unfair competition activities. The takeaway for employers: “confidentiality” is a trigger word for the NLRB and caution should be used when crafting such provisions in any form of employment agreement to keep the coverage as clear and narrow as possible. As the ALJ noted in the Red Cross decision, “the Board has consistently held that broadly defined confidentiality rules prohibiting the dissemination of information similar to the rules involved here” violate Section 8 of the NLRA.