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NLRB: Challenged investigation and information protection provisions in hotel management company’s code of conduct didn’t interfere with employee rights

By Ronald Miller, J.D.

The hotel management company employer’s government investigations policy and its information protection policy provided guidelines to protect the sizeable amount of sensitive information it obtained from its guests, associates, and other third parties.

Finding that an employer’s legitimate business justifications for its government investigations and information protection policies outweighed the slight risk that employees would misread the rules as restricting their ability to provide information to the Board, coworkers, or third-parties, such as a union, the NLRB concluded that the rules were lawful. The Board determined that the employer established a compelling interest in safeguarding the information of its guests, associates, and other third parties and in protecting itself from liability with respect to confidential information collected by it and stored in its databases (Interstate Management Co., LLC, May 20, 2020).

Code of ethics. The employer is a third-party hotel management company that operates approximately 400 hotels throughout the country. At issue here is whether the employer unlawfully maintained two overly broad policies in its Business Code of Conduct and Ethics regarding government investigations and information protection. The code of conduct applies to the employer’s approximately 30,000 employees.

The General Counsel challenged that portion of the government investigations policy which provided that requests from the police, IRS, and other regulatory authorities must not be answered without first obtaining clearance from the employer’s legal department.

Similarly, the General Counsel challenged language in the information protection policy that confidential information includes, but is not limited to, personal information, which is defined to include any information that can be traced to any individual such as a name, address, telephone number, email address, bank or credit card information, social security number, etc., including customer and associate information.

Evaluation of work rules. In Boeing Co., the Board set out a new standard for determining whether a facially neutral work rule, reasonably interpreted, would unlawfully interfere with, restrain, or coerce employees in the exercise of their Section 7 rights. The Board overruled the “reasonably construe” prong of Lutheran Heritage Village-Livonia. Instead, the Board in Boeing held that when evaluating a facially neutral policy, rule, or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, it will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.

Government investigations policy. Applying Boeing, an administrative law judge found that the employer’s government investigations policy would interfere with the rights of employees to provide evidence to the Board or cooperate in Board investigations. He further found that the employer’s justifications for the policy—preventing employees from providing official responses to requests from police or government investigators on behalf of the company—did not outweigh its infringement on Section 7 rights. Accordingly, the ALJ concluded that maintenance of the policy violated Section 8(a)(1).

The Board agreed with the ALJ that employees have a Section 7 right to provide evidence to the Board and to cooperate in Board and other state and federal labor and employment-related investigations without interference. However, the Board disagreed with the ALJ that the investigations policy was unlawful. The Board observed that nothing in the policy compelled an interpretation that employees must refer NLRB investigative inquiries directed to them to the employer’s legal department. On its face, the policy was expressly limited to protecting the “rights of third parties, associates, customers, suppliers, and others” who may be affected by the release of their information.

Business justification. Because the policy does not include language specifically limiting it to situations in which an employee is asked to provide information on the employer’s behalf, the Board concluded that it could not categorically find that employees would reasonably view it as restraining Section 7 activity to some degree. Thus, the Board turned to the employer’s business justification for its policy.

In the course of the employer’s operations, it obtains sensitive personal information about its employees, customers, vendors, and others. An official testified that it was common practice for law enforcement personnel to visit hotel properties, flash a badge, and request information about employees or hotel guests from the front desk or management personnel. Such encounters can result in the release of information without regard for the rights of those affected or the obligations of the employer to ensure that is released in accordance with appropriate legal processes.

As a result of this testimony, the Board found that the employer established a compelling interest in safeguarding the information of its guests, associates, and other third parties and in protecting itself from liability that might arise if the information it collects were to be released without appropriate vetting from the legal department.

Finding that the employer’s legitimate business interests outweighed the slight risk that employees would misread the rule as restricting their ability to provide information to the Board, the agency found that its maintenance of this policy did not violate the Act.

Information protection policy. The ALJ also determined that the employer’s information protection policy, when reasonably interpreted, would interfere with employees’ exercise of their Section 7 rights to use the names and contact information of coworkers for organizing purposes. Applying Boeing’s balancing test, the ALJ found that the policy’s adverse impact on employee rights was significant and outweighed the employer’s legitimate interest in protecting the personal information it collected, so that the policy was unlawful.

Finding that the employer’s information protection policy was limited to the disclosure of information given to the employer in confidence, and stored in its records and databases, the Board reversed the ALJ. The Board found that the information protection policy provided guidelines to protect the sizeable amount of sensitive information that it obtained. In particular, the employer established that the purpose of the policy was to prohibit a company representative from obtaining and distributing confidential information without authorization.

Based on the plain language of the policy, the Board concluded that a reasonable employee would understand the information protected is information collected and stored in the employer’s databases, and the policy does not restrict employees’ ability to share generally known contact information with each other or with a third party, such as a union. Even assuming that there is some risk that employees may misunderstand the policy to apply to information other than that stored in the employer’s records, the Board found any such potential interference with the exercise of Section 7 rights was slight, and that the risk was outweighed by the employer’s legitimate business justifications for the policy. Accordingly, the Board found the information protection policy lawful.