NLRB Ruling Condemns Blanket Confidentiality Policies During Internal Investigations

by Sheppard Mullin Richter & Hampton LLP

[author: Bora Rawcliffe]

In Banner Health System d/b/a Banner Estrella Medical Center, 358 N.L.R.B. No. 93 (2012), the National Labor Relations Board (NLRB) held that an employer’s maintenance and application of a general confidentiality rule prohibiting employees from discussing ongoing investigations of employee misconduct violates Section 8(a)(1) of the National Labor Relations Act.

The Banner Health System Case

In Banner Health System, a human resources consultant asked a complaining employee not to discuss the matter with coworkers while the investigation was pending. According to the NLRB, this request constituted a “blanket approach” that clearly lacked a legitimate business justification. Although the employer did not give the confidentiality instruction in all cases, it was given here and the instruction was included in the employer’s standard “Interview of Complainant Form” that human resources used during investigation interviews. The NLRB reasoned that the confidentiality instruction “had a reasonable tendency to coerce employees, and so constituted an unlawful restraint of Section 7 rights.”

The NLRB found that an employer’s generalized concern with protecting the integrity of its internal investigations is insufficient to justify a general prohibition on employee discussion of ongoing internal investigations. The NLRB reasoned that such a generalized concern would not outweigh employees’ Section 7 rights, which include the right to discuss their terms and conditions of employment. Rather, the NLRB concluded that an employer can require confidentiality of employees during an internal investigation only if one of the following legitimate business justifications exists:

  1. Witnesses in the investigation need protection
  2. Evidence is in danger of being destroyed
  3. Testimony is in danger of being fabricated, or
  4. There is a need to prevent a cover up

Accordingly, the NLRB ordered the employer in Banner Health System to cease and desist from maintaining or enforcing the rule that employees may not discuss with each other ongoing investigations of employee misconduct.

Importantly, however, the NLRB has previously recognized an employer’s interest in protecting the attorney-client privilege and attorney work product protection in connection with internal investigations, and Banner Health System did not overrule or limit those decisions. As such, depending on the circumstances surrounding the investigation and applicable state law, an employer may require employees to keep the investigation confidential to protect the attorney-client privilege and/or attorney work product immunity.

Lessons Learned

Although this case arose in the context of an employee complaint about the misconduct of a coworker, it is important for employers to consider the application of this ruling to all internal investigations. Despite the requirements set forth in Banner Health System, employers likely will not find compliance difficult in the context of government contracts investigations involving potential fraud, waste, or abuse. For example, most government contracts internal investigations centered on detecting fraud or other types of misconduct will generally meet at least two of the legitimate business justifications discussed in Banner Health System, including the need to prevent cover ups and spoliation of evidence.

A confidentiality instruction may also be permissible to protect the attorney-client privilege and/or attorney work product protection. Banner Health System did not affect prior decisions sanctioning confidentiality directives to protect the attorney-client privilege and/or attorney work product doctrine, and such an instruction may therefore be appropriate depending on the nature of the investigation and applicable state law.

Employers may take a number of steps to ensure compliance with Banner Health System in future internal investigations. First, employers should check their applicable internal policies and guidelines to ensure no blanket confidentiality requirements exist that prohibit employees from discussing with each other ongoing investigations. Secondly, human resources personnel and other employees involved in internal investigation interviews should avoid giving general confidentiality instructions without documenting that at least one of the above business justifications exists. Lastly, even outside the interview context, employers should document the existence of one or more of the four justifications listed above before they give any type of confidentiality instruction to employees or witnesses involved in an investigation.


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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