National Labor Relations Board Orders New Contractual Provisions

Employers that require their employees enter into contracts with extensive Confidential Information and Non-disparagement provisions should take note of the National Labor Relations Board recent order concerning Quicken Loans’s contractual provisions. In 2011, Quicken sued Lydia Garza, a former mortgage banker with the company, to enforce the non-confidentiality, non-compete agreement in their contract. Garza then filed an unfair labor practice complaint alleging that Quicken had violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”).

Section8(a)(1) prohibits employers from creating regulations that “chill,” or impede an employee’s Section 7 rights. Section 7 generally give employees the right to self-organize for the purposes of collective bargaining, and to engage in activity designed to bring about collective bargaining. An employer can impede an employee’s Section 7 rights in numerous ways. For example, the NLRB has held that a rule that prohibits employees who are subject to investigation from discussing the matter impermissibly impedes on these rights. Additionally, any work rule that impedes an employee from speaking to a peer about their Section 7 rights is a violation of the NLRA.

In Quicken’s case, the Confidentiality provision required employees to maintain any non-public information relating to personnel lists and personal information of co-workers “in the strictest of confidence.” The Non-Disparagement provision prohibited employees from publicly criticizing, ridiculing, or defaming the company. The Administrative Law Judge ruled that the Confidentiality provision violated Section 8(a)(1) because the restrictions substantially hinder employees’ ability to self-organize by prohibiting them from sharing with coworkers the names, wages, benefits, and contact information of other employees. Regarding the Non-Disparagement provision, the judge also ruled that the language of the employer’s provision inhibits the employee’s ability to engage in Section 7 activities. The judge explained that Section 7 gives employees the rights to publicly criticize their employer especially when doing so to garner support from the public or other employees.

This decision represents the NLRB’s expansion of employee’s rights to even non-union employees. To avoid litigation, employers should check the provisions in their employment contract. These provisions should not be overly broad, and should not contain language that may explicitly or implicitly restrict an employee’s ability to discuss employment conditions, wages, or contact information. Additionally, while a disclaimer that the employer does not intend to restrict an employee’s Section 7 rights may not keep an employer completely off the hook for restricting these rights, the inclusion of such a disclaimer may provide more favorable treatment from the judge in any potential litigation.

About the Authors
Ashley French is a partner in Huddleston Bolen’s Charleston, WV office. Mark Conrad is a law clerk at Huddleston Bolen and a second year law student at the West Virginia University College of Law.