NLRB Strikes Down Policies Prohibiting Defamatory Statements By Employees And Disclosure of Confidential Information

Under Board precedent, if an employer’s policy proscribing employee conduct is ambiguous, the Board will find it lawful unless one of three conditions apply: (1) the policy was adopted in response to union activity; (2) it has been applied to restrict the exercise of employee’s rights under the law; or (3) employees would “reasonably construe” it to prohibit protected, concerted activity.  In two recent decisions, the NLRB has shown its willingness to strike down virtually any policy with even remotely ambiguous language under the guise that, regardless of context, employees can “construe” an ambiguous word to prohibit them from engaging in protected activities.

In Costco Wholesale Corporation, the Board required an employer to remove a policy which prohibited an employee from making an electronic statement that “damages the Company or  defames any individual or damage any person’s reputation,” finding that it would chill employees from making any type of statement that was critical of the employer.  Instead, it reasoned that the only statements that could be prohibited are those which are “malicious, abusive or unlawful” (of course, defamation is unlawful, so the Board’s decision begs more questions than it answers).

More significantly, the Board ordered the employer to remove a policy which prohibited employees from discussing: (1) “private matters of . . . other employees . . . including sick calls, leaves of absence, FMLA call outs, ADA accommodations, worker’s compensation injuries, personal health information, etc.”; (2) “sensitive information such as membership, payroll, confidential financial, credit card numbers, social security numbers, or employee personal health information”; or (3) “confidential information such as employees’ names, addresses, telephone numbers, and e-mail addresses.”  The Board found that an employee could “reasonably construe” those policies as prohibiting employees from discussing their compensation or other terms and conditions of their benefits.  In so doing, the Board flatly refused to read the supposedly offending words in context with the other words surrounding it, instead finding that if the policy could be read in any possible way to apply to protected activity, it was invalid.

The Board reached a very similar finding in Flex Frac Logistics, LLC, finding that a non-disclosure policy in an employee handbook which prohibited employees from disclosing sensitive information about pricing, business plans, software and the like was overbroad because it also prohibited employees from disclosing “personnel information and documents.”  Under the Board’s reading, an employee could “reasonably construe” that policy to prohibit discussion about wages or other terms and conditions of employment.  Again, the Board refused to read that language in the larger context of the legitimate confidentiality restrictions contained in that policy.

In both of these decisions, the Board gave short shrift to decisions of federal appellate courts finding that policies like this need to be given a “fair reading” in the context of the entirety of their language.  While the appellate courts may ultimately deny enforcement of these decisions, employers would be well-advised to review their policies to determine potential trouble in case the Board reviews them.

- Dan Handman (Los Angeles)

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