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Firing employee who refused to sign unlawful confidentiality agreement violates NLRA

By Marjorie Johnson, J.D.

An employer that promulgated an unlawful confidentiality agreement and terminated an employee for refusing to sign it violated the NLRA, irrespective of whether the employee engaged in concerted activity. The Second Circuit found “no reason to judge the effect of an unlawful requirement on an employee’s termination based solely on whether the employee acted in concert or alone,” and enforced the NLRB’s order (NLRB v. Long Island Association for AIDS Care, Inc., August 31, 2017, per curiam).

Discussions of wages prohibited. When he was hired by the nonprofit HIV-AIDS agency in February 2014, the employee had to sign a confidentiality agreement that required employees to maintain the confidentiality of information protected by the Health Insurance Portability and Accountability Act (HIPAA) and a state law regarding HIV testing. However, the agreement also “strictly prohibited” the disclosure of information about “non-public information intended for internal purposes,” including salaries, as well as any unauthorized communication with the media regarding “employment” or “workings and conditions.” It also stated that any breach of confidentiality could result in disciplinary action “up to and including suspension or termination of employment and criminal prosecution.”

Voices concerns about wages. In November, the employee read an article reporting that the CEO had mishandled public funds by misappropriating cost-of-living adjustment (COLA) benefits intended for the agency staff. He and his coworkers were upset about the article, leading him to ask the HR director and others how COLA funds were used. In response, he was told to “just focus on his work.” A couple of months later, he was written up for insubordination after he refused to prepare a presentation since “he did not get paid enough.”

Fired after signing “under duress.” In March 2015, the agency required staff to again sign its confidentiality agreement. Though the employee signed, he indicated that he did so under duress and objected to the prohibition on discussing wages and talking to the media. On March 24, the HR director called him into the meeting and gave him another confidentiality agreement to sign or “get fired.” Though he signed it, he indicated he did so “under duress” three times at the bottom. The director then told him “you just terminated yourself.”

Procedural background. The employee filed an NLRB charge alleging the employer unlawfully prohibited employees from talking about their terms and conditions of employment and fired him for asserting his Section 7 rights and engaging in protected concerted activities. The ALJ found that he had engaged in concerted activity, but that even if he hadn’t, his discharge violated the NLRA since the confidentiality statement was “facially invalid” and he was fired for refusing to sign it.

Affirming, the NLRB agreed that the employer violated the NLRA by promulgating a confidentiality agreement that employees would reasonably construe to prohibit them from discussing wages or other terms and conditions of employment, and by discharging the employee for refusing to agree to the unlawful document. However, the Board did not base its decision on a finding that he engaged in protected concerted activity.

Terminated for refusal, not performance. The Second Circuit first determined that the record supported the NRLB’s finding that the employee was terminated because of his refusal to agree to the terms of the confidentiality statement. Notably, his employer did not refute his assertion that the HR director told him to sign the agreement “or get fired” and that after he wrote “under duress” after signing it, she told him that he “just terminated his own employment.”

Moreover, the employer failed to support its contention that it discharged him due to poor performance. Though the record indicated that he previously had difficulty with time management, was considered for termination several months earlier, and received a write-up for refusing to do a presentation, the more recent events indicated that he was improving. For instance, his supervisor told him four days before his firing that he had made a “big improvement since November.” Also, right before the meeting where he was fired, his supervisor met with him to discuss his future involvement in upcoming work events.

Concerted activity not necessary. The NLRB was also correct, as a legal matter, that the employer violated Section 8(a)(1) when it terminated the employee for his refusal to sign an unlawful confidentiality agreement, regardless of any concerted activity. The NLRB has long held that discipline imposed pursuant to an unlawfully overbroad rule is unlawful. One of the central concerns underlying what’s known as the Board’s Double Eagle rule is that “the mere maintenance of an overbroad rule tends to inhibit employees who are considering engaging in legally protected activities by convincing them to refrain from doing so rather than risk discipline.” Thus, an employer may not take coercive action against an employee for refusing to sign documents that deter protected activity, such as an unlawful arbitration agreement.

Thus, the NLRB correctly held that the employer violated the NLRA by firing the employee for refusing to agree to an unlawful confidentiality agreement. The fact that employees had not yet organized to protest the unlawful nature of the restriction did not “make it any less unlawful.” It would be “illogical and untenable” to adopt the rule, as the employer urged, that an employee is only protected from the unlawful policy if he actively organizes with other employees against it. “Instead, we judge the effect of the requirement on an employee’s termination based on the lawfulness or unlawfulness of the requirement.”