NLRB Strikes Down Employee Conduct Rules and Non-Disclosure Agreement, Reminding Employers to Be Mindful of Their Policies
Consistent with a trend in assailing employers’ workplace policies, the NLRB recently struck down nine employee policies, and the confidential information and non-disclosure agreement of Hoot Winc LLC (d/b/a Hooters), all of which employees signed upon initial hiring. NLRB Judge William Nelson Cates found that the policies at issue, which dealt with discussion of tips, employee conduct, disclosure of company material and business affairs, and social media, were over-broad and interfered with employees’ rights to engage in activity protected by Section 7 of the National Labor relations Act (“Act”). Likewise, the judge found that the restaurant chain’s non-disclosure agreement also infringed on employees’ Section 7 rights.
Section 7 of the Act guarantees employees the right to engage in concerted activity for the purpose of collective bargaining or other mutual aid or protection. Section 8 of the Act prohibits employers from interfering with or restraining employees in exercising their Section 7 rights. In his decision, Judge Cates found that nine policies in Hooters’ employee handbook violated Section 8 of the Act. The policies at issue prohibited the following: (1) discussing tips with other employees or guests; (2) insubordination to a manager or lack of respect with fellow employees; (3) disrespect to guests including profanity or negative comments or actions; (4) unauthorized dispersal of sensitive company operating materials; (5) conduct affecting the company’s smooth operation, goodwill, or profitability; (6) off-duty conduct that negatively affects the company’s reputation; (7) discussing the company’s business or legal affairs outside the company; (8) posting information on social media outlets that violates the company’s confidentiality policy; and (9) posting disrespectful or negative comments about the company, employees, customers, partners, or competitors. Judge Cates found that these policies were over-broad because they prohibited employees from discussing the terms and conditions of their employment or expressing unpopular views (policies 1, 2, 4, 7, 8, and 9 above), failed to provide examples or clarification (policy 3 above), and failed to provide exclusions for Section 7 protected communications (policies 5 and 6 above). Finally, Judge Cates found that the confidentiality and non-disclosure agreement, which prohibited disclosure of information about the company’s “employees and their job duties, payroll or accounting records . . . [or] personnel policies and practices,” might reasonably be understood to prohibit discussion of wages and salary or disciplinary policies, and was thus in violation of Section 8 of the Act.
Employee handbooks increasingly have become targets of the NLRB effort to protect employees’ Section 7 rights The Hooters case is only the most recent example of the Board using Section 7 of the Act to find personnel policies, particularly those that pertain to employee conduct and speech, in violation of the law. Employers should be vigilant in reviewing their employee handbooks, and should update them periodically, lest they become the focus of the NLRB’s escalating attention.