In case you were worried that the NLRB might be losing steam, fear not! On July 29, the NLRB struck down Minteq International’s non-compete, confidentiality and at-will policies. On the same day, the D.C. Circuit Court of Appeals denied Quicken Loans Inc’s petition for review of an NLRB decision finding that confidentiality and non-disparagement provisions in Quicken’s Mortgage Banker Employment Agreement unreasonably burdened employees’ rights under Section of the NLRA. Coincidence? Perhaps not. (Click here, here, and here for review on employment-at-will) This does not — repeat not— mean that you can never include non-compete, confidentiality , non-disparagement and at-will policies in your employee handbooks or employment agreements. Read on after the jump for the details…
Here’s what happened in each of the cases:
Minteq International v. International Union of Operating Engineers: Minteq required new employees to sign an employment agreement containing non-compete and confidentiality provisions, as a pre-condition of employment. Now, don’t worry. You can still require employees to sign an employment agreement and you can still include these provisions. The problem here was that there was a collective bargaining agreement between Minteq and the International Union of Operating Engineers–and Minteq failed to give the union notice and an opportunity to bargain over the agreement and its provisions. The agreement, the Board ruled was a mandatory bargaining issue.
Now here’s where it gets interesting: Neither the company nor the union even raised the issue of the employment agreement or its non-compete and confidentiality provisions — and, consequently, the Administrative Law Judge below did not rule on the issue. In fact, no one raised the issue of these same provisions during the negotiation of a subsequent contract that went into effect in January, 2015. The NLRB’s three-member panel, however was not deterred by such a minor detail. The Board reasoned that since the agreement and the specific provisions were a mandatory bargaining issue, the Union should have been told of the requirement, and that the ALJ was wrong not to rule on the issue, even though no one raised it and even though that means the issue wasn’t properly before the ALJ or the Board. Whether the Board’s ruling on this issue was proper will only be determined if Minteq decides to take the matter up on appeal.
The Board also struck down non-interference provisions (i.e. prohibitions on interfering with business relationships) and at-will provisions were “overbroad” and could reasonably be construed to prohibit activity permitted under Section 7. This is the NLRB’s usual reason for striking down these type of provisions. Specifically, the prohibition against interfering with Minteq’s business relationships could be construed by employees to prohibit them from asking customers to boycott Minteq’s products in support of a labor dispute, which employees are allowed to do under Section 7. The Board said: “The [interference] rule clearly places restrictions on employees’ ability to communicate with the respondent’s customers and restricts employee efforts to ‘improve terms and conditions of employment or otherwise improve their lot as employees through channels outside the immediate employee-employer relationship.”
What about the at-will clause? Is the NLRB attempting to outlaw at-will employment? If it is, the good news is that this case is not likely to support those efforts. Here again, the issue had more to do with the presence of a collective bargaining agreement, and because of that, the at-will clause could cause confusion with certain provisions of the CBA. Specifically, under the CBA, in the first 6 months of their employment, new employees can be disciplined, laid off or fired at Minteq’s discretion. Once that six-month probationary period expires, however, employees can only be disciplined or terminated for just cause and the union has the right to file grievances when Minteq does not follow that standard. If you are not a “union shop” this part of the ruling shouldn’t really affect you or your ability to require employees to sign agreements with at-will disclaimers.
What about Quicken Loans Inc. v. National Labor Relations Board? The ALJ and then the Board found that the non-disparagement provision and parts of its non-disclosure provisions contained within Quicken’s employment agreement violated NLRA Section 7. The non-disparagement provisions prohibited employees from publicly criticizing the company and its management. The ALJ and the Board found that employees could construe that provision to restrict their rights to engage in protected, concerted activity under Section 7 (i.e. to discuss working conditions with the aim of improving them).
What about the confidentiality/non-disclosure provisions? The ALJ and the Board took issue with Quicken’s definition of confidential information as including “”personnel information including, but not limited to, all personnel lists, rosters, personal information of co-workers” and “handbooks, personnel files, personnel information such as home phone numbers, cellphone numbers, addresses and email addresses.” Including this information in the definition would, similarly, restrict employees’ ability to engage in protected concerted activity under Section 7.
OK, but what did the Circuit Court say about all that? The Board is charged with interpreting and enforcing the NLRA, and the Board’s findings and decision are therefore afforded a certain amount of deference and that it can only reverse if it finds the decision to be arbitrary, capricious and an abuse of discretion, which it did not find here.
So what’s are the takeaways? First, if you are dealing with a union, you may need to keep it in the loop on agreements you want your employees to sign or new policies you want to implement. Additionally, if there is a union and a CBA involved, you need to make sure that policies and provisions are not inconsistent with the CBA. Finally, you need to write your policies carefully. You cannot prohibit disclosure of information, or making negative statements if those prohibition would limit employees’ rights to communicate about or get together to communicate about working conditions. Finally, be aware that you now need to review and update provisions contained employment agreements in addition to your employee handbook.
Well, that’s all for now. See you next week — and stay cool!
Disclaimer: Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
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