On January 8, 2013, a National Labor Relations Board (“NLRB”) administrative law judge ruled that a proprietary/confidential information provision in Quicken Loan’s employment agreement with its mortgage banker employees violated federal law. This ruling was the latest in a series of recent rulings on the legality of employer confidentiality policies under the National Labor Relations Act (“NLRA”). These rulings are significant for all employers – not just those with unionized workforces – because they provide key guidance on how employers should draft or revise their confidentiality policies to ensure enforceability and compliance with the NLRA. In holding unlawful the kinds of provisions that many employers adopt as standard practice, these decisions serve as a caution to employers to draft their policies carefully.
As discussed in our October 2012 Client Alert “First NLRB Decisions on Social Media Give Employers Cause to Update Policies, Practices,” the NLRA in Section 7 protects employees’ rights to engage in “concerted activity” for the purpose of collective bargaining, or for other mutual aid and protection, and in Section 8 prohibits employers from interfering with, restraining, or coercing employers who are exercising rights guaranteed under Section 7. Many employers assume – mistakenly – that the NLRA and NLRB are relevant only if their workforce is unionized. To the contrary, the NLRA covers all private employers that have an impact on interstate commerce (with certain exceptions, such as public employers and railways) – approximately six million private employers nationwide.
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