Confidentiality Revisited: Board Holds Confidentiality Rules in Workplace Investigations Presumptively Lawful

In Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019), the National Labor Relations Board continued its recent trend of reversing decisions issued during the prior administration, and returned to employers the right to implement and enforce confidentiality rules during investigations of workplace misconduct.  Overturning its 2015 decision in Banner Estrella Medical Center, a 3-1 Board majority held that blanket rules requiring confidentiality during open investigations are presumptively lawful.

The Banner Estrella decision had upended precedent by requiring a legitimate and substantial business justification for investigative confidentiality rules.  This placed the burden on an employer to show, on a case-by-case basis, that the need for confidentiality outweighed its employees’ Section 7 rights to discuss the terms and conditions of their employment. 

The employer in the instant case maintained rules that required confidentiality regarding investigations and prohibited employees from discussing with colleagues the details of an investigation or interview.  The employer promulgated these rules to maintain the integrity of workplace investigations, as some employees might be reluctant to report theft or other misconduct for fear of being branded a “snitch.” The rule was also to discourage employees from leaking investigative information to potential suspects or discussing and coordinating their responses to interview questions ahead of time.  As an example, the company explained that an employee had resigned rather than face retaliation for reporting misconduct after the employer, in compliance with the Board’s Banner Estrella decision, could not promise that the employee’s report would remain confidential.

In Apogee Retail, the Board found the Banner Estrella approach “deficient” and overruled it.  In its place, the Board applied the framework outlined in its 2017 Boeing decision.  In accordance with that framework, the Board held that a rule requiring confidentiality—if limited to the duration of a workplace investigation—is properly categorized as a Boeing Category 1 rule and thus presumptively lawful.  However, because the rule at issue in Apogee Retail was not limited to the duration of the investigation, the Board concluded that that specific rule fell within Boeing Category 2, which requires case-by-case analysis of the impact of the rule on employees’ Section 7 rights.  Consequently, the Board remanded the case for further consideration.

In reaching its decision, the Board noted that its own investigative procedures—as well as those of the EEOC and OSHA—require confidentiality during investigations of wrongdoing, and that the Banner Estrella decision had been inconsistent with federal guidance on the subject.  In particular, the Board pointed to the EEOC’s enforcement guidelines, which explain, “[a]n employer should make clear to employees that it will protect the confidentiality of harassment allegations to the extent possible.”  Such assurances could not reasonably be given under the Banner Estrella holding, which required an employer to balance the business interests against employee rights before mandating confidentiality.

Dissenting board member Lauren McFerran, whose term expired the same week of the ruling, described the majority as “permit[ing] employers to hold gag rules over their workers.”  By way of example, McFerran suggested that a victim of sexual harassment could be fired for speaking to or warning other employees.  The majority responded to the dissent by acknowledging its shared concern that an employer could “use investigative confidentiality to shield their own wrongdoing or that of predatory ‘star’ employees from exposure.”  However, the majority continued, the remedy to such concerns did not lie with Banner Estrella, which made it more difficult for employers to conduct fair, thorough investigations into potential misconduct.

The decision frees employers to enforce rules with respect to investigative confidentiality and thus more easily maintain the integrity of a workplace investigation.  Such rules are presumptively valid—provided they are limited to the duration of an open investigation.  In this respect, an employer should exercise caution as to overly broad confidentiality policies under Boeing Category 2 designation, which would once again shift the burden back to the employer to show the weight of its business justifications.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.