A Dangerous Intersection

Review policies that might expressly or implicitly violate the NLRA.

August 14, 2013

Most credit unions have confidentiality policies that prohibit unauthorized disclosures of financial matters concerning members and credit union business.

But policies that impinge on employees’ right to discuss salary and wage information with other co-workers may violate the National Labor Relations Act (NLRA)—and can lead to stiff penalties.

Congress enacted the NLRA in 1935 to protect the rights of employees and employers, encourage collective bargaining, and curtail private-sector labor practices that can harm the welfare of workers, businesses, and the U.S. economy.

Section 7 of the act provides, in part, that employees have the right to engage in “concerted activities” for the purpose of collective bargaining or other mutual aid or protection. Section 8 (a)(1) makes it unlawful for an employer to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7.

The National Labor Relations Board (NLRB) has long held that Section 7 covers the right of employees to ascertain what wages are paid by their employer because wages are vital terms and conditions of employment. The agency has also held that an employer may not lawfully prohibit employees from discussing their pay rates, raises, and perceived inequities.

Therefore, the intersection of workplace confidentiality rules and employees’ Section 7 rights can be perilous for employers. A confidentiality policy with overly broad language, for example, interferes with employees’ Section 7 rights when employees would reasonably believe they are prohibited from discussing wages or other terms and conditions of employment.

In fact, maintenance of the rule itself may be an unfair labor practice, even where there is no evidence of enforcement.

When evaluating whether a workplace confidentiality rule encroaches on employees’ Section 7 rights, the NLRB first considers whether the rule explicitly restricts employees from discussing wages.

If the answer is no, the agency then examines the circumstances to determine whether:

  1. Employees would reasonably construe the language of the rule to prohibit Section 7 activity;
  2. The rule was promulgated in response to Section 7 activity; or
  3. The rule was applied to restrict employees’ exercise of Section 7 activity.

If any of those circumstances apply, then the confidentiality rule will be found to violate the act unless the employer can articulate and establish a substantial business justification for the rule that outweighs the infringement on employee rights.

The NLRB recently applied this analysis in a case in which the employer’s confidentiality policy provided that under no circumstances would financial matters concerning the firm or its clients be discussed with outsiders or friends.

Although the policy did not explicitly sanction employees’ salary discussions, the evidence demonstrated that the human resource manager, when presenting new employee orientation, routinely told employees that salary discussion was a part of the confidentiality rule (Jones & Carter Inc., NLRB Case No. 16-CA-27969 [Feb. 8, 2013]).

Section 7 applies to both unionized and nonunionized employees. Accordingly, all credit unions should be careful in reviewing their own confidentiality policies for overbreadth—both in writing and in application.

To avoid violating employees’ federal rights to engage in protected concerted activities, credit unions should:

  • Ensure that workplace confidentiality policies do not expressly or implicitly prohibit employees from discussing wages, benefits, or conditions of employment;
  • Train and educate managers and supervisors on Section 7 to ensure that confidentiality policies are not applied in ways that restrict or chill employees’ Section 7 rights; and
  • Exercise caution when considering disciplining employees for workplace conduct that accompanies potentially protected concerted activities.

Be sure that such conduct is so egregious that there is no question that the employee is not protected by the act.

TRISH WALSH is an associate at Farleigh Wada Witt, Portland, Ore.