The NLRB’s Challenge To Bridgewater’s Confidentiality Clauses: Its Significance For Employers

by Pullman & Comley - Labor, Employment and Employee Benefits Law
Contact

Pullman & Comley - Labor, Employment and Employee Benefits Law

The NLRB’s new focus on non-union employment has been well–chronicled here.  Employment contract provisions thought to be governed only by state contract law principles are now subject to the federal National Labor Relations Act and its unfair labor practice prohibition.  Recent NLRB activity concerning confidentiality provisions in hedge fund Bridgewater Associates’ standard employment contract underscores this development and furnishes an important lesson for all employers.

Provisions safeguarding a company’s trade secrets or competitively sensitive confidential business information are standard fare in many employment contracts.  Bridgewater’s provisions were more protective than most.  One such provision made the terms of the employee’s employment with the company confidential.  Another broadly defined “Confidential Information” to include any non-public information relating to Bridgewater’s business or affairs or those of any existing or former officer, director, employee or shareholder.  “Confidential Information” also included employee compensation information and information regarding the company’s organizational structure, including the general structure of its departments.  Another provision barred the disclosure of Confidential Information to “any media business,” with “media business” defined to include websites, blogs and social media outlets.

The challenge came via a June 30, 2016 unfair labor practice complaint the NLRB served on Bridgewater.  The NLRB charged that the provisions in question violated the contracting employees’ “Section 7 rights.”  Section 7 of the National Labor Relations Act (29 U.S.C. § 157) grants non-supervisory employees the right to form, join or assist unions, and the further right to engage in “other concerted activities” for their “mutual aid or protection.”  Employer conduct that interferes with, restrains or coerces employees in the exercise of these rights is an unfair labor practice prohibited by §8(a)(1) of the Act – and this is the charge the NLRB leveled against Bridgewater.

The Board’s theory is easy to explain.  The “mutual aid or protection” to which Section refers relates to conduct concerning the employees’ wages, hours and other conditions of employment.  If employees are contractually forbidden to talk with other employees or perhaps even a union organizer (in person, electronically or even through social media) about their compensation or the other terms of their employment or just their dissatisfaction with their lot at work, they will never be able to engage in the concerted activity the Act authorizes and protects.

In October 2016, the NLRB withdrew its complaint.  There was no trial.  There was no ruling (by the administrative law judge who was to hear and decide the case).  This likely means  that Bridgewater settled, agreeing to make its confidentiality provisions less restrictive.

Confidentiality agreements with employees should not be designed to prevent the employees from talking with others about their wages, hours and other conditions of employment.  They should focus on truly confidential information about the business.  As a practical matter, prohibitions like Bridgewater’s rarely produce their desired effect, violations are difficult to detect, and disciplining violators raises a host of other issues.  Employers should review their confidentiality provisions to  make sure they are not so restrictive as to be unenforceable, and that they reflect a consideration of their employees’ Section 7 rights.

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.

© Pullman & Comley - Labor, Employment and Employee Benefits Law | Attorney Advertising

Written by:

Pullman & Comley - Labor, Employment and Employee Benefits Law
Contact
more
less

Pullman & Comley - Labor, Employment and Employee Benefits Law on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.