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In Banner Health System v. N.L.R.B., 2017 WL 1101104 (D.C. Cir. 2017), the court struck down a confidentiality agreement that encompassed “private employee information (such as salaries, disciplinary action, etc.) that is not shared by the employee” because the restriction unlawfully impinged on the employees’ rights under Section 7 of the National Labor Relations Act (Act) to discuss such matters.

When considering whether an employer’s rule is overbroad and violates the employees’ Section 7 rights under the Act, the NLRB considers “whether the rule (1) could be reasonably construed by the employee to restrict [such] activity, (2) was adopted in response to such activity, or (3) has been used to restrict such activity.”

Applying this standard, the court agreed with the NLRB that the confidentiality agreement “expressly reached information about salaries and employee discipline. A reasonable employee could well understand Banner’s rule to prohibit the very discussion of terms and conditions of employment that Section 7 protects. That is the sort of overbreadth our precedents squarely forbid.”

The case reinforces a position the NLRB has endorsed for several years and provides some helpful takeaways regarding how to lawfully structure confidentiality restrictions:

  • Do not include terms and conditions of employment, such as wages, benefits, and discipline, as confidential information. Even if not unlawfully applied, the mere maintenance of a policy that makes such terms confidential is unlawful, and including such terms amounts to a red flag.
  • Amend overly broad confidentiality policies before they are challenged. This case started as a retaliation case, but after the Region saw the confidentiality policy during discovery, it amended the complaint to challenge the policy.
  • “Safe harbor” language does not save the day. The court held that the “shared by the employee” language was too vague to adequately inform employees of when they were permitted to discuss the “confidential” salary and disciplinary information. The court went on to hold that the “shared by the employee” language implied that some affirmative act or permission was required from the employee whose information was the topic of discussion. This is contrary to NLRB decisions holding that Section 7 protects an employee’s right to use any information “innocently obtained,” regardless of whether that information was specifically shared from one employee to another.