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Busy Board Returns to Rule Permitting Workplace Confidentiality Restrictions during an Employer’s Investigation

As anticipated, in one of the last decisions before the end of Member McFerran’s term, the NLRB issued another important opinion.  Reverting back to precedent that preceded a 2015 decision, the Board, in Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019), held that an employer’s confidentiality restrictions for information relating to workplace investigations are categorically lawful under Boeing where such rules explicitly apply for the duration of an investigation.  The Board’s decision overruled a 2015 case that demanded a case-by-case determination of whether confidentiality is required in a particular investigation.

With the wave of workplace complaints and employer-initiated investigations on the rise in recent years, the Board’s Unique Thrift Store decision provides helpful clarity for employers looking to ensure confidentiality of information revealed during the pendency of an open investigation.

Factual Background

Unique Thrift Store promulgated two investigative confidentiality rules and disseminated copies of the rules to its employees:

  • One rule required employees to “cooperate fully in investigations and answer any questions truthfully and to the best of their ability,” and indicated that both reporting persons and interviewees are “expected to maintain confidentiality.”

  • The other rule listed behaviors that could result in disciplinary action, which included the “unauthorized discussion” of investigations or interviews “with other team members.” Unique Thrift Store had never disciplined an employee for violating those rules, but asserted that the provisions were necessary for a multitude of business reasons.

Board History:  From Banner to Boeing

In its 2015 Banner Estrella opinion, the Board addressed whether employers could lawfully impose such confidentiality restrictions on employers – more specifically, whether employers could lawfully instruct employees to refrain from discussing workplace investigations.  Banner Estrella Medical Center, 362 NLRB 1108 (2015), enf. denied on other grounds 851 F.3d 35 (D.C. Cir. 2017).  In finding that such instructions restricted employees’ exercise of their rights under Section 7 and thus violated Section 8(a)(1), the Board “placed the burden on the employer to determine, on a case-by-case basis, whether its interests in preserving the integrity of an investigation outweighed presumptive employee Section 7 rights.”  (Emphasis added.)  In other words, the Board placed the burden on the employer to set forth specific evidence indicating that a lack of confidentiality would interfere with the investigation.  Only if the employer satisfied that showing could it lawfully mandate confidentiality among its employees.

After Banner Estrella Medical Center, the Board established a balancing test in Boeing Company, 365 NLRB No. 154 (2017) to analyze facially-neutral rules that may reasonably be construed to interfere with employees’ Section 7 rights.  Under the Boeing test, the Board must balance the rule’s potential impact on employees’ rights against the employer’s legitimate justifications associated with the rule.  As a result of that analysis, the Board would designate the rule at issue in one of three categories:  (i) rules that are always lawful; (ii) rules that may be unlawful, depending on the circumstances; and (iii) rules that are plainly unlawful.  Since Boeing, the Board has applied the three-category approach to myriad employer-promulgated workplace rules, to varying results.

Rejection of Banner Estrella and Application of Boeing

A majority of the current Board, comprised of Chairman Ring and Members Kaplan and Emanuel, rejected the approach set forth in Banner Estrella because it failed to balance employee and employer interests, and instead wrongfully imposed a burden on employers to establish that their interests in obtaining confidentiality outweighed those of their employees.

In rejecting the Banner Estrella test, the Board instead faithfully applied the balancing test set forth in Boeing Company, concluding that investigative confidentiality rules of this nature are “Category One” lawful to the extent those rules apply only during open investigations.  Although the Board recognized that the two confidentiality provisions at issue could potentially interfere with the exercise of Section 7 rights, it nevertheless found that the impact was relatively slight in comparison to the employer’s compelling business justifications, which included, among other things, preventing theft, protecting employee privacy, and ensuring the integrity of investigations.

Ultimately, however, the majority remanded the case, as the rules at issue did not explicitly limit confidentiality to the duration of the investigation.  According to the majority, employees could reasonably interpret such rules to apply beyond the duration of the investigation and, therefore, a remand for further consideration was appropriate.

Member McFerran Dissents

In one of her final published dissents, Member McFerran criticized the majority for again choosing to reverse precedent “without notice or good reason.”  Member McFerran expressed great concern that employers are now permitted to “hold gag rules over their workers if the rule is linked to an open investigation of workplace misconduct.”  According to Member McFerran, there is no getting around the fact that employer “gag rules” of this sort infringe upon employees’ Section 7 rights.

Takeaways

Confidentiality in workplace investigations is important.  It allows the employer to assess witnesses without fear of taint to the process that can come from unrestricted discussion. As anyone charged with conducting a workplace investigation knows, witness recollection is imperfect at best and so trying to preserve it is good practice.  What is often lost in the discussion of workplace investigation is that someone may be disciplined or terminated as a result:  it is better for all concerned if the investigation is thorough and unimpeded by workplace discussion.

Employers can now rest-assured that facially-neutral rules requiring workplace confidentiality during the term of an open investigation are lawful under the NLRA.  Whereas under Banner Estrella, the burden was placed on the employer to justify its rule, now the Board has blessed such rules without necessitating a case-by-case review.

To be sure, this decision comes at an interesting time in the wake of the #MeToo movement, as a number of states have passed (or have considered passing) legislation that will impact the enforceability of workplace non-disclosure provisions, particularly in the context of the settlement of workplace sexual harassment claims.  The enacted and proposed legislation reflect recent pressure by legislators and the public at large to ensure complainants and victims are not “silenced.”  A key distinction between the recent spate of these types of laws restricting public disclosure by #MeToo victims as part of settlement agreements and the Board’s decision here is that the Unique Thrift Store decision applies only during the term of an investigation – not forever.  As a result, Unique Thrift Store appropriately reflects the Board’s determination that confidentiality is necessary for an employer investigation to achieve the desired results of preventing or remediating potential civil or criminal violations in the workplace, such as discrimination, retaliation, theft or violence.

Finally, as we have discussed in recent posts (see here and here), the criticism that precedent is being changed without notice and good reason rings somewhat hollow.  The last several years have seen significant changes to longstanding precedent with no notice.  As for the existence of “good reason,” one fundamental policy underlying the National Labor Relations Act is stability in labor relations.  One can argue that the constant change of precedent hardly makes for stability or good labor relations.

It is likely that the Board will issue more decisions in the coming days, as Member McFerran’s term just ended on Monday, December 16th.

© 2020 Proskauer Rose LLP.

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About this Author

Mark Theodore, Employment Attorney, Proskauer Rose
Partner

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S. 

Some highlights of his career include:

  • Successfully negotiated the first contract for a shipping agency during constant threat by union to shut down Port of Los Angeles

  • Successfully defended a major theme park when the NLRB sought bargaining order after the union...

310-284-5640
Joshua Fox Labor & Employment Attorney Proskauer Rose
Associate

Joshua Fox is an associate in the Labor & Employment Law Department and a member of the Labor-Management Relations Group. He represents a diverse range of clients, including professional sports leagues and teams, hotels, hospitals, and pipe line contractors, among many others, in collective bargaining, administration of their collective bargaining agreements, arbitrations and matters before the National Labor Relations Board.

In particular, Josh has extensive experience representing professional sports leagues, including Major League Baseball, the National Hockey League, the National Football League, the National Basketball Association, and Major League Soccer in collective bargaining, labor relations issues, such as grievance and salary arbitrations, and wage-and-hour issues.

212.969.3507
Associate

Dominique Kilmartin is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Dominique graduated cum laude from Seton Hall University School of Law, where she was an editor of the Seton Hall Law Review. Dominique also worked as a student attorney at the Civil Litigation & Practice Clinic and as an intern for the Honorable Judge John Michael Vazquez of the United States District Court for the District of New Jersey. Upon graduation from law school, Dominique received the ABA/BNA Award for Excellence...

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