Fifth Circuit Holds Confidential Information Policy Protecting Company Financial and Personnel Information Violates the NLRA
In an opinion likely effecting many Texas employers, the Fifth Circuit Court of Appeals held that an employer's confidentiality policy that prohibited employees from disclosing all company financial and personnel information without a carve-out for employee wage information violated the National Labor Relations Act.
Flex Frac, a non-union employer, required all of its employees to sign the following confidentiality policy:
Employees deal with and have access to information that must stay within the Organization. Confidential Information includes, but is not limited to, information that is related to: our customers, suppliers, distributors; Silver Eagle Logistics LLC organization management and marketing processes, plans and ideas, processes and plans, our financial information, including costs, prices; current and future business plans, our computer and software systems and processes; personnel information and documents, and our logos, and art work. No employee is permitted to share this Confidential Information outside the organization, or to remove or make copies of any Silver Eagle Logistics LLC records, reports or documents in any form, without prior management approval. Disclosure of Confidential Information could lead to termination, as well as other possible legal action.
Following her termination, a former employee filed a charge with the NLRB and the Acting General Counsel for the Board issued a complaint charging the employer with maintaining a rule prohibiting employees from discussing employee wages. The ALJ found that while there was no specific prohibition against employees discussing their wages with one another, the policy might be reasonably interpreted as restricting employees' right to discuss their wages with one another and therefore violated Section 7 of the NLRA.
On appeal to the federal court of appeals, the court restated the long-standing, well-established rule that "a workforce rule that forbids the discussion of confidential wage information between employees" violates the NLRA. In analyzing the confidentiality provision at issue, the court concluded that it could be reasonably construed to prohibit employee discussion of wages both inside and outside the company and ordered that the NLRB's order prohibiting Flex Frac from promulgating and maintaining its confidentiality policy be enforced.
There are likely many Texas employers that have confidentiality policies that cover and protect company financial and personnel information but do not explicitly carve out employee wage information from the definition of that protected information. Employers with simiar confidentiality provisions may want to consider revising those policies to explicitly exclude employee wages from coming within the scope of their policies so they are not subject to a charge that they have committed an unfair labor practice.
You can download the full copy of Flex Frac v. NLRB here.