NLRB Acknowledges Employers’ Rights to Maintain the Confidentiality of Customer Information
In what may be a harbinger of good things to come, the NLRB recently reversed an Administrative Law Judge’s (“ALJ”) finding that Macy’s, Inc.’s confidentiality policies unlawfully interfered with employees’ Section 7 rights. Unlike many employer policy decisions issued by the Board in recent years, this case does not break new ground or saddle employers with new, unrealistic onuses. It merely reinforces well-established rules regarding the use of sensitive customer information obtained from an employer’s records and actually reaffirms the right of employers to protect “information their employer lawfully may conceal.”
What is refreshing about this case, though, is what the Board, in a two-to-one decision by Chairman Miscimarra and Member McFerran, with Member Pearce dissenting, did not do. Namely, it did not attach an excessively broad interpretation to rules that, while theoretically susceptible to such a construction, were clearly not intended to have such an overreaching effect. In an era of Board decisions that have ostensibly transformed the Lutheran Heritage “reasonably construe” standard into a micromanagement weapon wielded against employers to invalidate commonplace personnel policies based on uber speculative constructions untethered to industrial realities, this case may mark the apex of this aggressive push and the beginning of a more rational Board jurisprudence. The decision returned focus on the original intent of Lutheran Heritage. That is, rules will only be held to per se violate employees’ rights under the Act if they explicitly restrict Section 7 rights and just because a rule could be interpreted that way does not mean it’s reasonable.
The Board reaffirmed that where a rule does not explicitly restrict Section 7 rights, it will only be found to violate the Act if it can be shown that “(1) employees would reasonably construe the language [of the rule] to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity, or (3) the rule has been applied to restrict the exercise of Section 7 rights.”
Board Finds That Employees Have No Right to Use Customer Data Acquired from Employer’s Records
At issue in this case were three rules confidentiality rules. One restricted the use of “Confidential Information,” which was defined to include “social security numbers or credit card numbers – in short, any information, which if known outside the Company could harm the Company or its business partners, customers or employees or allow someone to benefit from having this information before it is publicly known.” The other two prohibited the disclosure of “personal data,” including customers’ “names, home and office contact information, social security numbers, drivers’ license number, account numbers and other similar data.”
The ALJ found that these rules unlawfully restricted employees’ Section 7 right to communicate with customers about their work-related concerns. The Board reversed the ALJ on the grounds that the rules only prohibited employees’ use or disclosure of sensitive data (i.e., customers’ social security and/or credit card numbers) or information obtained from the employer’s own confidential records. While the Board reaffirmed the proposition that “employees indisputably have a Section 7 right to concertedly appeal to their employer’s customers for their support in a labor dispute,” the Board held that this right did not usurp their employer’s right to protect and prevent the disclosure of “information their employer lawfully may conceal.” Neither of the Board’s justifications is particularly controversial – the Board has long recognized that employees have no right to use sensitive data or information drawn from the employer’s confidential records.
What is also notable, though, is that the majority rejected the much broader construction advocated by Member Pearce in his dissent, which would have expanded the scope of these rules beyond their apparent lawful parameters, because such a construction, while possible, was not reasonable.
Board Rejects Unreasonable Construction That Parses Out Certain Language from Entire Policy
First, the dissent argued that, as defined, “Confidential Information” would encompass customer contact information because such data could certainly benefit outside entities and/or its disclosure could harm the Company. The Board majority rejected this contention on contextual grounds because the language attacked by the dissent was preceded by an exemplary list of sensitive personal and proprietary data. These contextual elucidations, the majority reasoned, effectively precluded employees from reasonably interpreting the prohibition as embracing benign customer data such as names and addresses. The majority emphasized that just because a rule may be susceptible to a particular construction does not make that construction reasonable.
Board Rejects Speculative Scenario Not Grounded In Evidence
Second, Member Pearce’s dissent argued that an employer cannot restrict the use of customer information maintained in files the employer designates as “confidential” because this information is likely available to all employees in the normal course of their employment duties. The majority rejected this on two grounds. First, they pointed out that the Act does not protect employees’ use of information drawn from an employer’s records merely because employees have access to it as part of their duties. Second, “there is…no evidence in this case that the Respondent’s customer contact information was available to ‘all employees’ as the dissent contends, much less that it was used by them in the course of their normal employment duties…Our colleague’s unsupported speculation as to the Respondent’s ‘likely’ practices cannot substitute for evidence not in the record.”
In recent years, employers have reeled from the Board’s frequent unwillingness to acknowledge the reasonable and obvious intent of ordinary workplace rules and to instead concoct speculative scenarios out of whole cloth to justify finding such policies violative of the Act. Chairman Miscimarra has long argued that this increasingly frequent approach contradicts the true intent of the Lutheran Heritage “reasonably construe” standard and has imposed impossible burdens on employers trying to craft lawful policies that protect their legitimate business interests. Chairman Miscimarra has continuously advocated for the Board to repeal and replace the Lutheran Heritage standard because this standard is inherently susceptible to widely varying application and does little to promote the certainty and predictability employers need when promulgating workplace policies. While the majority in Macy’s did not adopt Chairman Miscimarra’s proposed replacement, Member McFerran did agree to reject the ALJ’s interpretation of the rules and policies in question based on the constrained parsing and overreach that dominated the Obama Board’s application of the “reasonably construe” standard.
With newly sworn in Member Marvin Kaplan and likely soon to be confirmed William Emanual, in September Chairman Miscimarra will have the first Republican majority of the Decade. However, with Chairman Miscimarra’s announced intention not to seek a second term, he will only have a couple of months in which to lead a newly construed Board in its move to the new standards and tests he has been advocating.