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Federal ALJ Finds Standard Employee Confidentiality Agreement Language to Violate NLRA

    Client Alerts
  • September 26, 2014

Earlier this month, attorneys for the National Labor Relations Board continued their legal assault on common employment policies and procedures. In MUSE School CA, a federal administrative law judge agreed that an employee confidential information agreement that prohibited employees from discussing business information not generally available to the public violated employees’ right to engage in concerted activity under the National Labor Relations Act.


The policy was primarily designed to protect children of celebrities who attended the school from disclosure of information or pictures to paparazzi or other persons outside of the school. A teacher at the school resigned her employment, and allegedly began complaining to school parents about the school and explaining her reasons for leaving. The school’s attorney wrote a letter to her warning her about violating the terms of the confidential information agreement signed during her employment. The teacher in turn, filed a complaint with the NLRB alleging an unfair labor practice. Subsequent to the charge filing, the school amended the policy to include a disclaimer making it clear that the confidential information policy will not be interpreted to interfere with concerted activity rights.


Counsel for the NLRB contended that both the original and revised policies violate Section 7 of the NLRA. The school claimed that the policy could not reasonably be interpreted to apply to employees’ rights to discuss terms and conditions of employment among themselves. The ALJ disagreed, concluding that both versions of the policy violated Section 7. The definition of confidential information included financial matters, budgets, compensation and other topics that could be reasonably interpreted by employees to prohibit discussion or disclosure of their personal compensation. The school’s interests in protecting celebrities and their children do not supersede these rights.


In addition, another provision in the policy prohibiting “any discussion of any nonpublic information” could be construed to prohibit employees from discussing their wages. Finally, the policy’s prohibition against photographing, taping or recording any school activity was found to be overbroad and in violation of the employees’ rights to engage in concerted activity.


The disclaimer in the revised policy did not achieve its intended effect because it was vague and was only adopted in response to the NLRB charge. Presumably, the ALJ would have upheld a very narrowly drawn confidentiality agreement, but it would need to be limited in such a way to avoid any inference that its terms applied or could be applied to employee concerted activity. Very few employer confidentiality policies or agreements would meet this test. As with prior similar decisions from ALJs, this decision is appealable to the NLRB and eventually to federal court. However, the opinion makes clear that the NLRB’s counsel will continue to aggressively litigate against common employment policies it considers to restrict employee rights.