Hunton Employment & Labor Perspectives

Employers should be aware of a recent ruling by the U.S. Court of Appeals for the District of Columbia Circuit that overly broad confidentiality and nondisparagement policies violate the National Labor Relations Act (“NLRA”).  The case, Quicken Loans v. NLRB, 2016 U.S. App. LEXIS 13778 (D.C. Cir.), involved an employment policy which prohibited employees from using or disclosing a broad range of personnel information without Quicken's prior written consent or to criticize publicly the company and its management. The National Labor Relations Board (“NLRB” or “Board”) determined that those rules ran afoul of Section 7 of the NLRA because they “unreasonably burden the employees’ ability to discuss legitimate employment matters, to protest employer practices, and to organize.” Quicken then appealed the NLRB’s decision to the D.C. Circuit Court of Appeals.

Section 7 of the NLRA guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection[.]” 29 U.S.C. § 157.  Under D.C. Circuit law, “whether workplace rules run afoul of Section 7's protections turns on an objective inquiry into whether the rules would reasonably tend to chill employees in the exercise' of their statutory rights." Unreasonable chilling generally takes two forms: (1) laws that restrict the Section 7 rights on their face; and (2) laws that can reasonably be construed to prohibit Section 7 activity or have been promulgated or applied to restrict the exercise of Section 7 rights.

On appeal, the U.S. Court of Appeals for the District of Columbia Circuit upheld the NLRB’s decision. The Court agreed that the confidentiality rule's prohibition against disclosing personnel information was overly broad since it included "all personnel lists, personal information of co-workers [and] personnel information such as home phone numbers, cell phone numbers, addresses and email addresses" to the extent that it would  "substantially hinder employees in the exercise of their Section 7 rights." The court also concluded that the non-disparagement rule was invalid because it prohibited employees from "publicly criticiz[ing], ridicul[ing], disparag[ing] or defam[ing] the Company or its products, services, [or] policies through any written or oral statement,” which stands in direct violation of their Section 7 rights.

This case indicates a growing unwillingness by the courts to restrict the free flow of information between employees and suggests that the judiciary will invalidate overly broad clauses in future employment contracts.