NLRB: Employees' NLRA Rights Not Infringed Upon With Employer's Confidentiality and Media Contact Rules

LA Specialty Produce Company - NLRB

Facts:  LA Specialty Produce Company maintained an employee manual which contained two rules which make up the basis of this dispute.  One rule, the Confidentiality and Non-Disclosure rule stipulated:  

• Every employee is responsible for protecting any and all information that is used, acquired or added to regarding matters that are confidential and proprietary of [LA Specialty Produce Company] including but not limited to client/vendor lists, client/vendor information, accounting records, work product, production processes, business operations, computer software, computer technology, marketing and development operations, to name a few.  Confidential information will also include information provided by a third party and governed by a non-disclosure agreement between [LA Specialty Produce Company] and the third party.  Access to confidential information should be disclosed on a "need-to-know" basis and must be authorized by management.  Any breach to this policy will not be tolerated and will be subject to disciplinary and legal action.

The other rule, the Media Contact rule stipulated:

• Employees approached for interview and/or comments by the news media, cannot provide them with any information.  Our President, Michael Glick, is the only person authorized and designated to comment on Company policies or any event that may affect our organization.

A complaint was filed complaining that both rules violated the National Labor Relations Act ("NLRA".)  An administrative law judge found both rules to be in violation of the NLRA and the full National Labor Relations Board ("NLRB") subsequently took the matter up thereafter.

Analysis:  While Section 7 of the NLRA provides that employees have the right to "self-organization, to form, join, or assist labor organizations, 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", there are certain limits.

Confidentiality and Non-Disclosure Rule

In this case, LA Specialty Produce Company's client and vendor lists contained sensitive information about pricing and discount.  While the administrative law judge found that employees have a Section 7 right to concertedly appeal to third parties, including their employer's customers, for support in a labor dispute, the NLRB could not find how the Confidentiality and Non-Disclosure rule interfered with that right.  Although the rule required employees to protect the confidentiality of LA Specialty Produce Company's client and vendor lists, it said nothing about employee's talking to LA Specialty Produce Company's clients or vendors.

Further, as a 2017 NLRB decision held, "employees may be lawfully disciplined or discharged for using for organizational purposes information improperly obtained from their employer's private or confidential records."  Consequently, the NLRA does not protect employees that divulge information their employer may lawfully conceal.

As a result, the NLRB reversed the administrative law judge's finding and held that this rule, as interpreted by an objectively reasonable employee, did not prohibit or interfere with the exercise of Section 7 rights.  While the rule only prohibited disclosure of LA Specialty Produce Company's "client/vendor lists", the rule did not prohibit employees from disclosing the names of LA Specialty Produce Company's customers and vendors to third parties, such as a labor organization.

Media Contact Rule

In this instance, the NLRB recognized that Section 7 generally protects employees when they speak with the media about working conditions, labor disputes, or other terms and conditions of employment.  With that being said, the NLRB pointed out that  LA Specialty Produce Company's Media Contact rule would not be facially unlawful unless it was reasonably interpreted as infringing upon the Section 7 right to communicate employees' personal opinions about wages, hours, or working conditions to the media.

When parsing the language of  LA Specialty Produce Company's Media Contact rule, the NLRB held that it stipulated that employees are only prohibited from speaking to the news media on LA Specialty Produce Company's behalf.  As employees have no right under the NLRA to speak on their employer's behalf, the NLRB reversed the administrative law judge and held that this rule did not interfere with any Section 7 right.

Decision:  In a 3 - 1 decision, the NLRB reversed an administrative law judge and held that an employer's Confidentiality and Non-Disclosure rule and Media Contact rule did not violate the Section 7 rights of its employees.

The Takeaway:  This is not a decision I would label as a "surprise" ruling from the NLRB.  However, it is noteworthy in so much as the NLRB parsed the language of LA Specialty Produce Company's two rules and, when applying prior NLRB rulings, reached the conclusion that the two rules were not unlawful.  I think the NLRB got it right here...but a more labor friendly iteration of the NLRB could certainly find enough wiggle room here to go the opposite direction.  Nevertheless, this decision should be viewed as a "win" for employers.

Date:  October 10, 2019

Order:  https://apps.nlrb.gov/link/document.aspx/09031d4582dcbeba