W e have prepared this Alert to advise Section 7 of the NLRA - - PDF document

Employment Law Alert

October 2005

Does Your Confidentiality Policy Violate The NLRA?

By: Martha L. Lester, Esq. and Stefanie P . Tavaglione, Esq.

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e have prepared this Alert to advise you of a recent decision by the National Labor Relations Board (“NLRB” or the “Board”) that could affect all employers -- union and non-union, alike. In Cintas Corporation and Union of Needletrades, Industrial and T extile Employees, AFL-CIO, CLC (UNITE), 344 NLRB No. 118, the NLRB held that a confidentiality provision contained in an employer's handbook unlawfully limited the employees' right to discuss their terms and conditions of employment, in violation of the National Labor Relations Act (“NLRA” or the “Act”). All employers who fall within the coverage of the NLRA and the jurisdiction of the NLRB – including non-union employers – should consider taking certain precautions in the wake of this decision.

The NLRA and How it Applies to Non- Union Employers

If you are like most employers, you may be surprised to learn that the NLRA protects non-union employees as well as union employees. It is critical that, as an employer, you understand your obligations under the Act to avoid the costs of having to defend against, and possibly remedy, a charge of unfair labor practices. Section 7 of the NLRA protects the associational rights of employees, including the right of all employees to act “in concert for mutual aid and protection.” The relevant portion of Section 7 provides that: Employees shall have the right to self-

• rganization, to form, join or assist labor
• rganizations, to bargain collectively

through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection …. (emphasis added). Employees may engage in NLRA-protected activities that do not consist of “traditional” union activities or collective bargaining. Section 7 of the Act is enforced under Section 8(a)(1), which provides that it is an unfair labor practice for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7.”

Does the NLRA Apply to All Employers?

• No. While it is true that the NLRA applies

to both union and non-union employers, it does not apply to all employers, nor does it provide protection for all employees. Certain employers

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are excluded from NLRA coverage and NLRB jurisdiction, including, but not limited to: · federal and state governments, their agencies, and political subdivisions; · wholly-owned government corporations; · the Federal Reserve Bank; · employers subject to the Railway Labor Act; and · employers in the dog-racing and horse- racing industries. Further, the following individuals (in addition to those employed by the above employers) also are exempt from the NLRA's coverage and the NLRB's jurisdiction: · agricultural laborers; · domestic servants; · individuals employed by a parent or spouse; · independent contractors; and · supervisors. In addition, the NLRB has established as part of its jurisdictional standards certain monetary

• thresholds. For example, retail enterprises fall

within the NLRB's jurisdiction only if they have a gross volume of business of at least $500,000 per year, inclusive of sales and excise taxes. For a non- retail enterprise to fall within NLRB jurisdiction, the enterprise must have purchases or sales of at least $50,000 per year. The NLRB has adopted several other revenue-based standards for various enterprises, with the primary exception that jurisdiction over national defense industries exists regardless of revenue thresholds.

The NLRB’s Decision

If you, as an employer, fall within the coverage

• f the NLRA and the jurisdiction of the NLRB, the

NLRB's decision in the matter of Cintas Corporation may well impact you. In that case, the issue before the Board was whether the confidentiality policy contained in Cintas Corporation's employee handbook violated Section 8(a)(1) of the Act. Specifically, the union alleged that the company's confidentiality policy restricted employees from discussing with one another or with union representatives their terms and conditions of

• employment. The challenged policy stated the

following: We honor confidentiality. We recognize and protect the confidentiality of any information concerning the company, its business plans, its partners1, new business efforts, customers, accounting and financial matters. (emphasis added). The Board explained that, although this language did not explicitly restrict Section 7 activity, a violation of Section 8(a)(1) would be found where: (1) employees reasonably would construe the language to prohibit Section 7 activity; (2) the policy was promulgated in response to union activity; or

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1 The Board clarified that Cintas Corporation used the term “partners” to refer to its employees.

(3) the rule has been applied to restrict the exercise of Section 7 rights. The Board then determined that the policy's unqualified prohibition of the release of “any information” regarding “its partners” reasonably could be construed by the employees to restrict discussion of wages and any other terms and conditions of employment with their fellow employees and/or with their union, and therefore, the policy was unlawful under the Act. It is significant to note that the Board reached this decision even though Cintas Corporation had not enforced its confidentiality policy against several employees who were identified and pictured in a union newsletter discussing employees' wage rates. The Board reasoned that the mere fact that the

• verly broad policy existed constituted a violation of

the employees' Section 7 rights.

How Does the Decision Affect Employers?

In light of this decision by the NLRB, employers should review thoroughly their handbooks, guidelines, confidentiality policies, and other policies and agreements to be certain that any confidentiality provisions contained therein are not in violation of the NLRA. Because employees' discussions of their terms and conditions of employment, including discussion of wages, could be determined to be a protected activity under Section 7, it follows that any restriction of such activity may be found to be an illegal, unfair labor practice under the NLRA. The Board has made it clear that such restriction contained within a confidentiality policy may be unlawful even if it is not explicit, as long as the language in the confidentiality provision “reasonably could be construed as a restriction.” To avoid such result, confidentiality policies must be reviewed periodically and redrafted, when necessary, to ensure that the policies cover legitimately protectable company and customer information, and that they do not restrict protected employee activities. If you have any further questions about the issue discussed in this Alert, or whether your confidentiality policies or any of your other policies should be examined as a result of this decision, or any other employment practices or compliance issues, please do not hesitate to call Martha L. Lester, Chair of the Employment Law Practice Group, or Stefanie P . T avaglione, a member of the Employment Law Practice Group, at (973) 597- 2500. You also may wish to obtain a copy of our newly published book, “The Practical Guide to Federal and New Jersey Employment Law: The Employer's Resource.” This Guidebook, published in connection with the New Jersey Business and Industry Association, is the resource for New Jersey employers seeking to comply with federal and New Jersey laws, regulations and procedures in the employment-related area. It provides management with information concerning existing laws, emerging trends, most frequently asked questions and practical tips on managing the workforce and workplace.

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