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Confidentiality agreement unlawful, but investigation nondisclosure policy OK; not ‘categorically’ applied

By Marjorie Johnson, J.D.

A confidentiality agreement that restricted employees from discussing ongoing disciplinary investigations involving themselves or coworkers ran afoul of their established rights under federal labor law to share employment-related information with one another, the D.C. Circuit held, affirming the NLRB’s ruling on that issue. However, it rejected the Board’s determination that the employer’s investigative nondisclosure policy also violated the NLRA, finding that there was insufficient evidence to show that employees’ nondisclosure was categorically requested in all HR investigations involving certain types of misconduct (Banner Health System v. NLRB, March 24, 2017, Pillard, C.).

A Banner Health System employee filed an unfair labor practice charge after he received a coaching for refusing his supervisor’s instructions to clean medical instruments using hot water from the coffee machine after a steam pipe broke. This prompted the regional director to file a retaliation claim, which was later amended to include claims that Banner also made employees sign an overbroad confidentiality agreement and maintained an overbroad rule requiring nondisclosure of investigative interviews.

Employer policies. All new hires were required to sign a confidentiality agreement that defined “confidential information” to include “private employee information (such as salaries, disciplinary action, etc.) that is not shared by the employee.” It also stated that “keeping this kind of information private and confidential is so important that if I fail to do so, I understand that I could be subject to corrective action, including termination and possibly legal action.”

The nondisclosure policy was contained in an “interview of complainant” form that Banner’s HR consultant relied upon when investigating complaints. The “Introduction for all interviews” section included the statement: “I ask you not to discuss this with your coworkers while this investigation is going on, for this reason, when people are talking it is difficult to do a fair investigation and separate facts from rumors.” The HR consultant testified that employees were never given a copy of the form and that she requested nondisclosure “half a dozen” times in 13 months, and only “in the more sensitive situations.”

She also testified that she made nondisclosure requests only during investigations in which she needed to speak to more than one person. When asked whether there were particular types of investigations with certain sensitivity issues leading her to ask someone to keep things confidential,” she mentioned complaints of sexual harassment, hostile work environment, and suspicion of abuse.

Earlier rulings. The ALJ held that the confidentiality agreement violated the NLRA but that its investigative nondisclosure policy did not. The Board unanimously affirmed as to the confidentiality agreement, while a divided panel reversed as to the investigative nondisclosure policy. A two-member majority held that Banner had an unlawful policy of asking employees not to discuss certain types of workplace investigations without performing the requisite individualized inquiry into the need for confidentiality. After the D.C. Circuit vacated and remanded the decision following the Supreme Court’s decision in NLRB v. Noel Canning, the Board reached the same conclusions on remand, again over one member’s partial dissent.

Confidentiality policy. The D.C. Circuit upheld the Board’s conclusion that the confidentiality agreement unlawfully suppressed employee Section 7 activity. First, it was overbroad as it explicitly directed employees not to discuss coworkers’ “private employee information (such as salaries, disciplinary action, etc.)” unless the information was “shared by the employee.” Since the directive expressly reached information about salaries and discipline, it could be reasonably understood to prohibit discussion protected by Section 7.

Moreover, the agreement’s permission to discuss information “shared by the employee” was ambiguous and inadequate to protect employees’ right to share innocently obtained information. First, it was not clear with whom the information must be “shared” in order to be fair game for employee discussion. Moreover, it was unclear how Banner’s rule would apply to situations where information was leaked inadvertently.

Banner also failed to show that a substantial business justification outweighed the burden the agreement imposed on employees. It was not tailored to Banner’s substantial interest in protecting patient privacy since it was not limited to “patient information,” but separately identified “private employee information … not shared by the employee” as “confidential information.”

Investigative nondisclosure policy. However, the circuit court rejected that part of the Board’s order which sanctioned Banner for maintaining a “categorical non-disclosure rule” regarding certain types of workplace investigations, finding instead that the record lacked substantial evidence. Notably, the Board had interpreted the HR consultant’s testimony as establishing that she requested confidentiality in any investigation into alleged sexual harassment, hostile work environment claims, charges of abuse, or similar misconduct. Thus, it found that she unlawfully utilized a categorical approach without making individualized determinations that confidentiality was necessary to maintain the integrity of any particular investigation or interview.

The D.C. Circuit disagreed, finding that the Board had made “unwarranted logical leaps that the evidence cannot fairly support.” Significantly, the HR consultant was never asked key questions to establish whether, in practice, Banner had a policy of categorically requesting nondisclosure regarding any particular kind of investigation. There was no evidence that any employee was aware of the form or the content of its nondisclosure script, and the HR consultant’s testimony suggested that Banner’s policy was not to request nondisclosure in “all investigations.” Her testimony was “simply too terse and unclear” to sustain the Board’s determination that Banner had a policy of categorically requesting nondisclosure of an entire subset of investigations.