NLRB Judge Strikes Down Employee Handbook Confidentiality Policy — Including Protection of Customer and Vendor Data

An employee handbook containing policies prohibiting (1) the disclosure of confidential company information, including personnel data, (2) use of the employer’s logo or trademark except as authorized by the company and (3) obstruction and interference with government investigations, including a requirement to notify the company’s human resources representatives or law department and to obtain approval to release information for a government investigation was found to violate Section 8(a)(1) of the National Labor Relations Act (“NLRA”) by an NLRB Administrative Law Judge (“ALJ”) in Macy’s Inc., JD(NY)-21-15. According to the ALJ’s decision, Macy’s employees when reading the policies could reasonably construe such policies to restrict their rights under Section 7 of the NLRA to engage in protected concerted activity for their mutual aid or protection. The ALJ found that these handbook policies unlawfully restricted those rights despite a “savings provision” in the employee handbook stating:

Nothing in the Code or the policies it incorporates, is intended or will be applied, to prohibit employees from exercising their rights protected under federal labor law, including concerted discussion of wages, hours or other terms and conditions of employment. This Code is intended to comply with all federal, state, and local laws, including but not limited to the Federal Trade Commission, Endorsement Guidelines and the National Labor Relations Act, and will not be applied or enforced in a manner that violates such laws.

It is significant that the ALJ found not only restrictions on the release of personnel information, such as names and addresses of employees, to be unlawful, but similarly concluded a restriction on the use of customer or vendor data violated the NLRA because in certain situations, employees rely upon such information to further their NLRA rights. The ALJ found the policy prohibiting unauthorized use of the Macy’s logo and trademark to violate the NLRA because those prohibitions could discourage employees from publicizing a labor dispute with their employer using the logo in distributed material. In addition, the ALJ concluded that the employer’s policy requiring employees to notify Macy’s representatives before participating in a government investigation might cause employees to hesitate to participate in a NLRB investigation or proceeding. Finally, in the ALJ’s view, the “savings provision” was ineffective because it was generic, whereas the provisions the ALJ found unlawful were very specific. The ALJ ordered Macy’s to rescind its policies found to be unlawful and notify its employees nationwide of these changes with notice postings in all of its facilities.

This decision, which could be revisited in an appeal, highlights the crossroads between data-protection rights of employers versus employee concerted-activity rights under the NLRA. Various federal, state, and common law data-protection laws exist to safeguard proprietary and confidential information and trade secrets, which are the intellectual property of an employer. Carefully drafted policies protecting that information must take into consideration the potential challenges under the auspice of employee statutory rights similar to those that resulted in the Macy’s decision.

For answers to any questions regarding this blog or with regard to NLRA requirements generally, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.