Court Rules Employer’s Confidentiality Policy Violates NLRA

The Fifth Circuit Court of Appeals ruled that a Texas company’s confidentiality policy violated the National Labor Relations Act (NLRA) by prohibiting the disclosure of the company’s “financial information, including costs and personnel information.” This case illustrates the conundrum employers face when attempting to protect proprietary information.

In Flex Frac Logistics, LLC v. NLRB  (5th Cir. 2014), Flex Frac challenged a determination by the National Labor Relations Board (NLRB) that its policy violated the NLRA even though it did not specifically prohibit employees from discussing wages or other terms and conditions of employment. The NLRB said that employees could reasonably interpret the “overly broad language” as restricting their rights under the NLRA.

Flex Frac appealed the NLRB’s decision, but the Fifth Circuit held that the evidence supported a finding that the confidentiality policy restricted employees’ rights. Even without a specific prohibition against discussing wages or other terms and conditions of employment, the court said the policy’s list of confidential information included “financial costs, which necessarily includes wages and thereby reinforces the likely inference that the rule proscribes wage discussions with outsiders.” The court also noted that the policy contained no language to clarify that “some personnel information, such as wages, is not included within its scope.”

This case reminds us that overly broad or carelessly drafted confidentiality policies can, and frequently do, run counter to current labor law. Be aware that, when an employee files an unfair labor practice charge, the NLRB frequently requests copies of an employer’s handbooks or personnel policies for review, even if they are not implicated in the charge. Review your personnel policies—particularly those on confidentiality—with legal counsel to ensure that they comply with the NLRA. Contact an MSEC attorney with questions and for assistance.