NLRB Finds Confidentiality Provision Unlawful

by Labor & Employment Group

(402) 341-3070

An employee of a temporary employment service signed an employment agreement containing a confidentiality provision stating that the terms of employment, including compensation, were confidential and that the disclosure of those terms “to other parties” may constitute grounds for dismissal. The temporary employee subsequently complained to his “assigned” employer about delays in compensation and expense reimbursement, which disclosures resulted in his termination by the temporary employment agency.

Following his termination, a charge was filed with the National Labor Relations Board alleging that his termination violated his § 7 rights under the National Labor Relations Act to engage in protected or concerted activity, an alleged violation of § 8(a)(1) of the NLRA.  Concerted activity is activity by two or more employees, or even one employee acting on behalf of others, related to the employee’s terms or conditions of employment.

The NLRB found the provision did indeed violate § 8(a)(1) of the NLRA as it clearly precluded employees from discussing compensation and other terms of employment with “other parties” which employees would reasonably understand as prohibiting discussions of compensation with union representatives. The NLRB held that if a work rule explicitly restricts employees from engaging in union or protected concerted activity, it is unlawful. Even if the rule does not explicitly restrict such § 7 activity, it is still unlawful if: (1) employees would reasonable construe the language of the rule as to prohibit § 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of § 7 rights to engage in protected or concerted activity, which includes union organizing efforts.

When crafting employment or, even severance agreements, for non-supervisory or managerial employees, employers should not include confidentiality provisions, or provisions which would preclude these non-supervisory or managerial employees from filing charges, cooperating in investigations by government agencies such as the NLRB, or even discussing their terms and conditions of employment with other employees. The NLS Group, 355 NLRB 169 (2010), affirming 352 NLRB 744 (2008).

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