Fifth Circuit Upholds Finding that Overly Broad Confidentiality Agreement Violated National Labor Relations Act

In Flex Frac Logistics, the U.S. Court of Appeals for the Fifth Circuit upheld an NLRB finding that an employee confidentiality agreement’s provision prohibiting employees from disclosing “financial information” and “personnel information and documents” to anyone outside the company violated the National Labor Relations Act.

Though the agreement did not explicitly prohibit the disclosure of wage information, the court sided with the Board that the agreement would chill employees’ exercise of their Section 7 rights because employees would reasonably believe that being prohibited from disclosing financial information included the disclosure of wage information.

Contrary to what some believe, companies should not rely on courts to rein in the NLRB’s crusade against workplace policies. Employers must be proactive in reviewing personnel policies and employee agreements to ensure that they do not contain provisions that infringe upon employees’ Section 7 rights. The addition of just a few clarifying words may make the difference between a lawful rule that furthers the employer’s legitimate business interests and an unlawful rule that can lead to costly unfair labor practice proceedings.