• Appeals Court Enforces NLRB Decision on Confidentiality Policy
  • May 15, 2014 | Author: Michael R. Lied
  • Law Firm: Howard & Howard Attorneys PLLC - Peoria Office
  • Flex Frac is a non-union trucking company. The rates Flex Frac charges its customers are confidential.

    Each Flex Frac employee is required to sign a document which includes a confidentiality clause which reads as follows:

    Confidential Information

    Employees deal with and have access to information that must stay within the Organization. Confidential Information includes, but is not limited to, information that is related to: our customers, suppliers, distributors; Silver Eagle Logistics LLC organization management and marketing processes, plans and ideas, processes and plans, our financial information, including costs, prices; current and future business plans, our computer and software systems and processes; personnel information and documents, and our logos, and art work. No employee is permitted to share this Confidential Information outside the organization, or to remove or make copies of any Silver Eagle Logistics LLC records, reports or documents in any form, without prior management approval. Disclosure of Confidential Information could lead to termination, as well as other possible legal action.

    An Administrative Law Judge (“ALJ”) found that although there was no reference to wages or other specific terms and conditions of employment in the confidentiality clause, the clause nonetheless violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) because it was overly broad and contained language employees could reasonably interpret as restricting the exercise of their Section 7 rights. The NLRB affirmed the ALJ’s ruling, and the employer appealed.

    The court of appeals closely followed existing NLRB case law. When determining whether a workplace rule violates Section 8(a)(1), the court must first decide whether the rule explicitly restricts activities protected by Section 7. Lutheran Heritage Village-Livonia, 343 N.L.R.B. 646, 646 (2004). If the restriction is not explicit, a workplace rule violates Section 8(a)(1) when it falls within one of the following categories: (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 appeals court limited its discussion to whether employees would reasonably construe Flex Frac’s confidentiality provision to prohibit Section 7 activity.

    According to the court, the list of confidential information encompassed financial information, including costs which necessarily included wages and thereby reinforced the likely inference that the rule proscribed wage discussion with outsiders.

    Here, the confidentiality clause gave no indication that some personnel information, such as wages, was not included within its scope.

    Flex Frac argued that its employees did not interpret the confidentiality provision to restrict their Section 7 rights. However, the court pointed out that neither the actual practice of employees, nor the employer’s enforcement of the rule is determinative.

    By specifically identifying “personnel information” as a prohibited category, Flex Frac implicitly included wage information in its list, especially in light of its prohibition against disclosing costs.

    Flex Frac Logistics, L.L.C. v. National Labor Relations Board, -- F. 3d -- , 2014 WL 1178698 (5th Cir. 2014)