Employers Must Examine Their Employee Agreements For Compliance With The National Labor Relations Act

by Akerman LLP - HR Defense
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Recently, an Administrative Law Judge (ALJ) for the National Labor Relations Board (NLRB) issued a decision in Quicken Loans, Inc., which found confidentiality and non-disparagement provisions to be unlawful under the National Labor Relations Act (NLRA). The decision is not surprising, and is in accord with the trend of the NLRB to find common employer conditions to violate the NLRA.  

When Quicken Loans sued former employees for asserted violations of a "Mortgage Banker Employment Agreement," which all mortgage bankers had signed during their employment, one of the defendants filed an unfair labor practice charge, alleging that certain provisions of the Agreement violated the NLRA. Specifically, the former employee challenged a provision that required employees to "hold and maintain all Proprietary/Confidential Information in the strictest of confidence" and stated that employees could not "disclose, reveal or expose any Proprietary/Confidential Information to any person, business or entity." The agreement broadly defined "Proprietary/Confidential Information" to include "any non-public information relating to or regarding the Company's . . . personnel," including "personal information of co-workers . . . such as home phone numbers, cell phone numbers, addresses, and email addresses" as well as "personal financial information, . . . background information, personal activities, information pertaining to work and non-work schedules, contacts, meetings, meeting attendees, [and] travel[.]" In addition, the former employee asserted that a provision, which prohibited employees from "publicly criticiz[ing], ridicul[ing], disparag[ing], or defam[ing]" Quicken or its "products, services, policies, directors, officers, shareholders, or employees, with or through any written or oral statement or image (including . . . any statements made via websites, blogs, postings to the internet, or emails . . . )" was also  overbroad in violation of the NLRA

The ALJ concluded that the two provisions at issue violated the NLRA because they "would reasonably tend to chill employees in the exercise of their Section 7 rights." The first provision would have unlawfully prevented employees from discussing with others, including fellow employees or union representatives, the wages and other benefits that they receive and the names, wages, benefits, addresses or phone number of fellow employees.  As these types of communications are protected by the NLRA, the provision was unlawful.  Further, the provision that prohibited public criticism of the employer violated the employees' protected concerted rights under the NLRA to make public statements against the employer and its products in order to appeal to the public, or their fellow employees, to gain support. 

But, what was the impact of this decision?  The ALJ ordered Quicken to cease and desist from maintaining these provisions and to notify its mortgage bankers that the provisions would not be enforced.  Further, Quicken was required to notify employees that it would not prohibit discussions of terms and conditions of employment, as protected by the NLRA.  Effectively then, Quicken' s lawsuit, at least as to these two provisions, was terminated, because Quicken would be in violation of the Order if it were to continue to pursue the asserted violations.

The case demonstrates that it is not enough for employers to simply examine their social media and other policies for compliance with the NLRA.  Rather, employers must re-examine all of their employee agreements to identify any that may be overbroad.  Employers may then need to have employees sign revised agreements in accordance with the applicable state law or be subject to having enforcement barred. As I will discuss at the Akerman Annual Labor & Employment Law Seminar, the NLRA has definitely invaded the non-union workspace.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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