The First Circuit Court of Appeals continued the current Board’s trend of striking down employer policies alleged to be overbroad restrictions on employees’ NLRA Section 7 rights.  In NLRB v. Northeastern Land Servs., Ltd., 2011 U.S. App. LEXIS 12678 (1st Cir. 2011), the First Circuit granted enforcement of the Board’s finding of 8(a)(1) violations and its order compelling the employer to rescind its confidentiality policy, reinstate a discharged employee, and compensate the former employee for lost interim earnings.  The decision is troubling for all employers as it demonstrates the Board’s increasing efforts to police non-union workforce issues and company confidentiality policies. 

In the NLS case, the Rhode Island-based employer provided temporary workers on a contract basis to its clients in the natural gas pipeline and telecommunications industries.  The employer required its employees to sign employment agreements that included a confidentiality provision stating that workers could not disclose compensation terms to third parties, and violations could result in termination.  In 2001, the employer began receiving complaints from one of its employees about his delayed repayments for hotel expenses, and a daily rate payment for use of his personal computer and use of his company-provided cellular phone.  Not satisfied with the employer’s response, the employee aired his gripes to his contact at one of the employer’s clients, in an effort to pressure the employer into caving into his demands.  The employer terminated the employee for violating the terms of the confidentiality provision in his employment agreement.  The employee filed a ULP charge with the Board and claimed retaliatory discharge.

The Board issued a complaint with two 8(a)(1) violations: (1) that the employer’s confidentiality policy was overbroad and infringed on employees’ Section 7 rights; and (2) that the employee’s termination was unlawful because it was based on a violation of an unlawful confidentiality policy.  At trial in 2002, the Board’s ALJ sided with the employer and declined to find that the policy or the discharge violated Section 8(a)(1).  In 2010, however, the Board reversed the ALJ’s decision and found that the employer’s policy was unlawful, and, because the employee was fired for violating the policy, his discharge decision also violated the Act.  (Note: the Board actually decided the case twice: first in 2008 by a two-member panel, which was vacated, and a second time in 2010, to comply with the Supreme Court’s decision in New Process Steel requiring three-member panel decisions).  The employer appealed the Board’s 2010 decision to the First Circuit, which upheld the Board’s ruling.  The First Circuit observed that the Board’s decision was not unreasonable, and, although the outcome may be “unattractive” to employers, found that the Board’s rule on employee protected activity is “intended to be prophylactic.”  

What can employers learn from the NLS decision?  First, it is clear that the current Board is intent on scrutinizing and challenging employer policies governing confidentiality and disclosure limitations.  Second, the Board will review employment decisions (e.g., discipline and termination) triggered by such policies – even where there is no obvious organizing or union-related protected activity.  Third, the Board is actively expanding its enforcement activity in non-union employment settings.  Last, the NLS decision reflects the challenges for non-union employers to maintain policies based on legitimate business needs without running afoul of the Board’s heightened enforcement initiatives.