Why it matters

Macy’s rules prohibiting the disclosure of confidential customer information didn’t violate Section 8 of the National Labor Relations Act (NLRA), the majority of a panel of the National Labor Relations Board (NLRB) determined, and employees would not reasonably construe the rules as prohibiting their Section 7 activity. An administrative law judge (ALJ) held that Macy’s rules banning the use or disclosure of customers’ contact information obtained from the employer’s confidential records violated Section 8(a)(1). Employees have a general right to appeal to an employer’s customers for support in a labor dispute, the ALJ said. A divided panel of the NLRB reversed, finding that there were no allegations that the rules explicitly restricted Section 7 rights, were promulgated in response to union activity or had been applied to restrict the exercise of Section 7 rights. Further, employees would not reasonably understand the rules to restrict Section 7 activity, the majority wrote.

Detailed discussion

Included in Macy’s policies were restrictions on the use of confidential information and personal data. The rules defined “confidential information” as “any information, which if known outside the Company could harm the Company or its business partners, customers or employees or allow someone to benefit from having this information before it is publicly known,” with examples such as pricing strategies, business or marketing plans, and documents that show Social Security numbers or credit card numbers.

“Personal data” encompassed names as well as home and office contact information of customers, vendors, and present and former associates.

“We are all trusted to maintain the confidentiality of such information and to ensure that the confidential information, whether verbal, written or electronic, is not disclosed except as specifically authorized,” according to Macy’s policy. “Additionally, it must be used only for the legitimate business of the Company.”

An administrative law judge (ALJ) found that the rules violated Section 8(a)(1) of the National Labor Relations Act (NLRA), as they placed limits on the use of information regarding customers. Employees have a Section 7 right to communicate with customers regarding matters affecting their employment, the ALJ said, and the rules were unlawful because they restricted such communications.

But the National Labor Relations Board (NLRB) disagreed, reversing the ALJ.

“There is no allegation in this case that the rules at issue explicitly restrict Section 7 rights, have been promulgated in response to union activity, or have been applied to restrict the exercise of Section 7 rights, so the question is whether employees would reasonably understand the rules to restrict Section 7 activity,” the majority wrote.

While recognizing that “employees indisputably have a Section 7 right to concertedly appeal to their employer’s customer for support in a labor dispute,” the NLRB found that employees would not reasonably construe the rules to prohibit Section 7 activity.

The “confidential information” rule specifically defines the data to which it applies, and there was no argument that employees have a right to use customers’ Social Security and credit card numbers. As for the scope of “personal data” as defined by the rules, the NLRB pointed out it was limited to only customer names and contact information obtained from Macy’s own confidential records.

“The Act does not protect employees who divulge information that their employer lawfully may conceal,” the majority said. “Thus, the Board has repeatedly held that employees may be lawfully disciplined or discharged for using for organizational purposes information improperly obtained from their employer’s private or confidential records. Consistent with these cases, because [Macy’s] rules only restrict the use or disclosure of confidential customer contact information that the [employer] ‘has’ or ‘maintains,’ they are lawful.”

One member of the panel dissented, arguing that the majority’s interpretation allowed any customer information obtained by an employer and maintained in its files to become protected if so designated by the employer’s policy. The dissent also concluded that Macy’s rules would be reasonably understood by employees to prevent them from contacting customers to appeal for support in connection with their concerted, protected activities.

To read the decision and order in Macy’s, Inc., click here.