Federal Court Enforces NLRB’s Decision To Strike Down Overbroad Confidentiality Policy


Eighteen months ago, we reported on a slate of decisions from the National Labor Relations Board (NLRB) which struck down social media, confidentiality and other similar policies from non-union employee handbooks.  In a surprising turn, the Fifth Circuit Court of Appeals recently enforced one of those decisions in Flex Frac Logistics LLC v. NLRB.  Flex Frac, a non-union trucking company in Fort Worth, Texas, had a confidentiality policy which prohibited the disclosure of “confidential information.”  As with most such policies, this policy applied not only sensitive business information like business plans, pricing and cost schedules and other intellectual property, but also to “personnel information and documents.”  It was that last part which led the NLRB to find that the policy was overbroad because it could be read to prohibit employees from discussing their wages.

Ultimately, the NLRB’s decision was reviewed by the Fifth Circuit, a court which is known to have issued very employer-friendly decisions in the past.  The Fifth Circuit noted that workplace rules which forbid employees from discussing the wages they earn is per se invalid, but at the same time it acknowledged that words or phrases in policies cannot be read in isolation.

The court invalidated Flex Frac’s policy because it gave “no indication that some personnel information, such as wages, is not included in its scope.”  It reached that finding despite evidence that its employees regularly discussed wages among themselves and despite the fact that the mention of “personnel information” was merely one of several topics that were mentioned in the policy, none of which even remotely related to employees.  In fact, ten years ago, the NLRB approved of an employer policy that which prohibited disclosure of “intellectual property” — a term which was defined to include “employee information.”

What are employers to make of this curious decision?  Not much.  This was a decision that was limited to very specific language of this policy, namely the fact that it applied to “personnel information” without any further elaboration.

Can employers still prohibit employees from disclosing confidential information? Absolutely.  Can they prohibit employees from discussing confidential matters about other employees, like medical situations or private identifying information like social security numbers or dates of birth?  Of course.  In fact, most employers rightly keep employee salaries and pay rates confidential and there is nothing in this decision which would require them to change their policies.

Nevertheless, Flex Frac does caution some review by employers.  In particular, employers would be well advised to review their confidentiality policies to ensure that the specific language which ensnared Flex Frac is not included.

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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