In welcome news to employers, the National Labor Relations Board (NLRB) issued a decision on December 19, 2019, holding that employer rules requiring employee confidentiality during the course of workplace investigations are presumptively lawful under the federal NLRA.
In Apogee Retail LLC d/b/a Unique Thrift Store the current NLRB overturned the Board's 2015 decision in Banner Estrella Medical Center that had required employers to demonstrate on a case-by-case basis that the integrity of the investigation would be compromised without confidentiality. This is a significant change that will allow employers to more easily maintain integrity during workplace investigations and will help protect witnesses and others involved in investigations.
In With the New (Apogee Retail LLC)
Apogee Retail LLC operates retail stores selling second-hand clothing and other items throughout the United States. Apogee Retail had policies which:
- Required employees to maintain confidentiality regarding investigations; and
- Prohibited employees from engaging in "unauthorized discussion" of investigations or interviews with coworkers.
In support of these policies, Apogee Retail argued, among other things, that employees interviewed during investigations almost always request confidentiality; prohibiting employers from requiring confidentiality hampers effective and thorough investigations; employees are more reluctant to cooperate in investigations out of fear of being viewed as a "snitch" or a "rat"; and in cases of multiple suspects, confidentiality prevents the potential leaking of critical information to other potential suspects.
Apogee Retail also argued it had conducted several investigations in which the inability to require confidentiality ultimately hindered its investigation.
Out With the Old (Banner Estrella)
In 2015, President Obama's National Labor Relations Board changed past precedent and announced a rule that significantly restricted employers' abilities to require confidentiality regarding workplace investigations. In Banner Estrella, the NLRB found that employees have a Section 7 right to discuss ongoing disciplinary investigations and held that employers could not maintain a blanket rule requiring confidentiality.
The Board further held that employers could restrict such discussions only where the employer could demonstrate that the employer had a legitimate and substantial business justification that outweighed employees' Section 7 rights. Banner Estrella imposed a very difficult burden on employers by requiring them to provide specific evidence supporting that "witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, and there is a need to prevent a cover up."
These restrictions meant that employers typically could not require confidentiality at the outset of the investigation. Any meaningful ability to require confidentiality in an investigation was diminished by Banner Estrella and often meant that confidentiality could only be imposed too late to provide any protections.
Back to the Future (The Boeing Company)
The NLRB General Counsel joined Apogee Retail in urging the NLRB to reconsider Banner Estrella, asserting that Banner Estrella failed to consider:
- U.S. Supreme Court and prior NLRB precedent recognizing that it is the NLRB's duty to balance an employer's legitimate business justifications against employees' Section 7 rights;
- The importance of confidentiality assurances to both employers and employees during an ongoing investigation; and
- The inconsistency with other federal guidance in requiring an employer to evaluate the need for confidentiality on a case-by-case basis.
The NLRB agreed with these arguments, and for good reason.
The framework set forth in Banner Estrella improperly placed the burden on the employer to determine whether its interests in preserving the integrity of an investigation outweighed employee Section 7 rights. Applying the more appropriate test set out in The Boeing Company,1 the Board determined that investigative confidentiality rules limited to the duration of the investigation are presumptively lawful.
The Board recognized that employers and employees have a substantial interest in keeping investigation details confidential that outweighs any adverse impact on employees' Section 7 rights. Specifically, the NLRB found the following justifications compelling:
- Confidentiality rules help prevent misconduct (including theft) by ensuring a prompt investigation;
- Assurances of confidentiality are necessary to protect employee witnesses from retaliation; and
- Confidentiality helps to ensure the integrity of the investigation.
The work rules in this case, however, did not limit confidentiality to the duration of the investigation. The NLRB held that if an employer chooses to extend confidentiality requirements beyond the conclusion of an investigation, it must be evaluated on a case-by-case basis to determine whether the employer has compelling business justifications that outweigh the impact to employees' Section 7 rights.
The majority therefore remanded the case for further consideration.
What the Board's Decision Means for Employers
Apogee Retail gives employers the ability to require employee confidentiality during the course of an investigation. However, if an employer's rules require employees to maintain confidentiality after the conclusion of an investigation, the employer must demonstrate it has a legitimate and substantial business justification for extending the confidentiality requirement that outweighs employees' Section 7 rights.
Employers should review and modify any investigative policies and procedures to require confidentiality for the duration of an active investigation and should carefully consider the ability to establish substantial business needs required to support a policy of extended confidentiality beyond the closure of an investigation.
1 In Boeing, 365 NLRB No. 154, the current NLRB reversed course from President Obama’s NLRB and established a new balancing test to be applied to workplace rules that reasonably may be construed to interfere with Section 7 rights. Since Boeing, the NLRB and General Counsel Peter Robb have provided a series of employer-friendly decisions and guidance to employers wanting to adopt and enforce common workplace rules.