NLRB Turns Its Attention to Corporate Codes of Conduct

by Parker Poe Adams & Bernstein LLP
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Over the past few years, EmployNews has chronicled the National Labor Relations Board’s efforts to declare routine employee handbook policies in violation of the NLRA’s prohibition against restrictions on employees’ ability to engage in protected concerted activity. Last month, the Board used similar reasoning to invalidate a policy protecting confidentiality of employee information contained not in the handbook, but in a separate corporate code of conduct.

Many employers adopt codes of conduct to set forth particularly important ethical and legal compliance issues. The codes set the tone for the company’s approach toward its business practices, and usually include monitoring, reporting and auditing processes. While some of these policies may also be repeated in the employee handbook, in many cases the code is only distributed to a subset of employees with special compliance responsibilities.

In Fresh & Easy Neighborhood Market, a union filed an unfair labor practice charge with the NLRB, challenging a number of the company’s policies. The challenge included a claim that the confidential information policy contained in the corporate code of conduct violated the NLRA, because it required employees to keep personnel information confidential.

The administrative law judge initially hearing the challenge concluded that the policy did not violate the NLRA because it could not reasonably be read by employees to apply to things like discussion of salary or terms and conditions of employment. The ALJ noted that the policy was not contained in the employer’s handbook, and applied to ethical matters instead of typical working conditions.

On appeal, the NLRB reversed this decision, finding the policy to violate employees’ rights to engage in concerted activity. The panel majority found that there was no legal distinction between policies contained in an employee handbook and those in a code of conduct. Perhaps more troubling, the NLRB ignored language in the policy that appears to limit its application to information collected from employees. The policy deals with protection of confidential personal information, and can be read to limit its prohibitions to disclosure by one employee of another employee’s personal identifying information.

Many states now apply strong penalties against employers that allow theft or misuse of confidential employee personal data. These employers frequently adopt policies intended to set forth their steps to protect the integrity of such information. The NLRB’s decision could complicate these efforts by deterring employers from implementing such policies absent specific carve-outs for anything that could possibly be interpreted to include terms and conditions of employment.

Taken cumulatively, these NLRB decisions appear intended to deter employers from applying rules of conduct and confidentiality out of fear of unfair labor practice charges. While this policy may facilitate unionization efforts, it could also have unintended effects, including misuse of employee personal information by coworkers for personal or financial reasons.

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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