Board Stiff: NLRB’s Rigid Approach to Confidentiality and Non-Disparagement Language Now Applies to Private Employment Agreements

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May 20, 2014

I recently published the following article in the Chippewa Valley Society for Human Resource Management newsletter – hope you enjoy!

Just when the business community thought the National Labor Relations Board’s (Board) aggressive, union-friendly agenda could not get any worse (or more likely, hoped and prayed the Board’s agenda would not get any worse, but assumed it would) it did. On January 8, 2013, the Board continued its assault on once-innocuous confidentiality and non-disparagement provisions, expanding its reach beyond handbook provisions to include privately negotiated employment agreements. The case is Quicken Loans, Inc., No. 28-CA-75857 (Jan. 8, 2013). In Quicken Loans, Inc., a Board administrative law judge (ALJ) concluded that Quicken’s standard Mortgage Banker Employment Agreement (Agreement) violated the National Labor Relations Act (NLRA) because it contained “overly broad and discriminatory rules,” as explained below. The Agreement reads, in pertinent part, as follows:

Pertinent Confidentiality Language

You shall hold and maintain all Proprietary/Confidential Information in the strictest of confidence and that you shall preserve and protect the confidentiality, privacy and secrecy of all Proprietary/Confidential Information.

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For purposes of this Agreement, Proprietary/Confidential Information means: (a) non-public information relating to or regarding the Company’s business, personnel, customers, operations, or affairs; (b) non-public information which the Company labeled or treated as confidential, proprietary, secret or sensitive business information;’

Proprietary/Confidential Information includes, but is not limited to, the following categories of information, irrespective of the medium in which it is stored’.

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Personnel Information including, but not limited to, all personnel lists, rosters, personal information of co-workers, managers, executives and officers; handbooks, personnel files, personnel information such as home phone numbers, cell phone numbers, addresses, and email addresses;

Personal Information Pertaining to Company Executives and Officers including, but not limited to, personal and family information, personal financial information, investment and investment opportunities, background information.

Pertinent Non-Disparagement Language

The Company has internal procedures for complaints and disputes to be resolved. You agree that you will not (nor will you cause or cooperate with others to) publicly criticize, ridicule, disparage or defame the Company or its products, services, policies, directors, officers, shareholders, or employees, with or thought any written or oral statement or image (including, but not limited to, any statements made via websites, blogs, postings to the internet, or emails and whether or not they are made anonymously or through the use of a pseudonym).

The ALJ concluded that the above language “would reasonably tend to chill employees in the exercise of their Section 7 rights.” In other words, in the ALJ’s view, most employees would interpret the above language to mean that communicating with co-workers or union representatives about the terms and conditions of employment for example, wages, benefits, hours and other working conditions was off limits and could lead to discipline (which is contrary to the NLRA’s basic protection).

Interestingly, the Board came to scrutinize the Agreement because one of Quicken’s former mortgage bankers who Quicken first sued to enforce the contractual non-compete portions of her Agreement filed an unfair labor practice charge against Quicken. This new defensive litigation tactic is significant, and should cause all employers to carefully consider the wording of restrictive-covenant provisions before threatening to enforce, or ultimately enforcing through litigation, restrictive-covenant provisions within private employment agreements (e.g., non-competition, non-solicitation and non-disclosure provisions).

In the wake of the Quicken Loans, Inc. opinion, human resources professionals are strongly encouraged to examine existing employment agreements for potentially impermissible language. Assuming impermissible language is present, one possible solution is to add disclaimers within these employment agreements to conspicuously disavow any intent to interfere with rights protected under the NLRA. Finally, Quicken Loans, Inc. represents a creative defensive tactic available to former employees who are sued for breach of contractual restrictive-covenant provisions. Therefore, employers must be even more deliberate before filing suit to enforce these provisions.

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