Confidentiality Policy Violates National Labor Relations Act Part 1

Professional Employment Law AttorneysBy:  Claudia D. Orr

The National Labor Relations Board (“the Board”) recently struck an employer’s confidentiality policy because it was overly broad and intruded upon the right of its employees to engage in concerted activity, as protected by the National Labor Relations Act (NLRA).

Jason Galanter was employed by MCPc, Inc., a company headquartered in Cleveland, Ohio, that provides technology products and services. At one point, Galanter complained to the company’s director of engineering about being short staffed and having to work too many hours. Galanter then mentioned that the company could have hired several engineers for the $400,000 salary that it was paying to a newly-hired executive.

The director of engineering forwarded Galanter’s comments to the CEO who had the company’s information systems manager review Galanter’s access to the computer network. He was advised that Galanter had full access to all files and systems. The CEO met with Galanter who admitted that he disclosed the salary amount but insisted that his computer network access was authorized in accordance with a project to which he was assigned and denied any wrongdoing.

The CEO indicated that the damage was done, and Galanter was discharged for disclosing salary information in violation of the company’s confidentiality policy. Later, Galanter testified that he obtained the information through employee rumors and an estimate he derived from Internet research concerning comparable salaries for similar positions.

Galanter, like other employees, received a copy of the employee handbook which contained the company’s confidentiality policy. The policy stated:

“[The Company] is engaged in sales, service and distribution, which requires that a strict code of confidentiality be maintained. No employee will store information outside of [the Company] (either written or electronic form) about any matter pertaining to the conduct of [the Company’s] business. No information regarding [the Company’s] purchase prices or processes shall be given to anybody without permission of senior management. Conversations regarding prices, service, problems, or other information specifically about one vendor or customer to another are prohibited. Any employee who compromises information may be subject to disciplinary action or possible dismissal.  In addition, idle gossip or dissemination of confidential information within [the Company], such as personal or financial information, etc. will subject the responsible employee to disciplinary action or possible termination.” (emphasis in original)

The Board was charged with resolving whether the italicized language in the confidentiality policy was overly broad in violation of the NLRA and whether Galanter was discharged for engaging in protected concerted activity under the Act. (Continued In Part 2)

If you have any questions about the lawfulness of your policy, contact the author at corr@plunkettcooney.com or 313-983-4863. (April 2014)