On December 17, 2019, the National Labor Relations Board (the “Board”) issued its decision in Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019), determining the issue of whether an employer’s investigative confidentiality rules are lawful. Overruling Banner Health System, 362 NLRB No. 137 (2015), and applying the analytical framework for facially neutral workplace rules established in Boeing Co., 365 NLRB No. 154 (2017), the Board held that investigative confidentiality rules are generally lawful as long as they are limited to the period of active investigation.

Background

At all material times, thrift store operator Apogee Retail (the “Employer”) maintained two written rules, one requiring employees to “maintain confidentiality” regarding workplace investigations into “illegal or unethical behavior” and the other prohibiting “unauthorized discussion” of investigations or interviews “with other team members.” The Employer provided a list of justifications for the rules, which roughly break down into three categories: (1) to prevent theft and respond quickly to misconduct through prompt investigations; (2) to protect employee privacy and ensure that there will be no retaliation by managers or other employees; and (3) to ensure the integrity of an investigation—including providing reliable and consistent protocols—for the benefit of both employers and employees. The issue before the Board was whether making employees “maintain confidentiality” and barring “unauthorized discussions” about workplace investigations violated employees’ organizing rights under the National Labor Relations Act (the “Act”).

Since 2015, the Board has followed the case-by-case approach to investigative confidentiality rules set forth in Banner Health System, which held that such policies generally infringe upon employees’ rights. However, in its 2017 Boeing decision, the Board directed agency officials to analyze other workplace rules utilizing the following three categories:

  • Category 1 rules are those that are presumptively legal because they do not affect employees’ rights or because employers’ reasons for maintaining them outweigh any infringement.
  • Category 2 rules more strongly affect employees’ rights but may be legal on a case-by-case basis if employers can justify them.
  • Category 3 rules are always illegal because employers cannot explain away their adverse effects on workers.

Decision and Order

The Board overruled Banner Health System, reasoning that it: (1) failed to consider Supreme Court and Board precedent recognizing the Board’s duty to balance an employer’s legitimate business justifications and employees’ Section 7 rights; (2) failed to consider the importance of confidentiality assurances to both employers and employees during an ongoing investigation; and (3) is inconsistent with other federal guidance.

Instead, applying the Boeing test for facially neutral workplace rules, the Board held that investigative confidentiality rules are lawful and fall within Boeing Category 1 (types of rules that are lawful to maintain) if, by their terms, they apply only for the duration of any investigation. With regard to the Employer’s rules at issue in the case, the Board found that they were not limited on their face to the duration of any investigation. The Board reasoned that employees might reasonably interpret a rule that is silent with regard to the duration of the confidentiality not to be limited to the duration of the investigation. As such, the Board found that the Employer’s investigative confidentiality rules fell within Boeing Category 2.

The Board remanded the case for further proceedings as to: (1) whether the Employer has one or more legitimate justifications for requiring confidentiality even after an investigation is over, and (2) if so, whether those justifications outweigh the effect of requiring post-investigation confidentiality on employees’ exercise of their rights under Section 7 of the Act. The Board noted that most justifications for requiring investigative confidentiality apply while an investigation is ongoing.

Takeaway for Employers:

Employers should review current workplace rules to ensure that any investigative confidentiality rules are limited in scope to open investigations. Employers should also ensure that any such workplace rules are facially neutral and not applied in a discriminatory manner.

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If you have any questions regarding the Board’s decision in Apogee Retail LLC, 368 NLRB No. 144 (2019), please do not hesitate to contact us. We are, of course, available to assist and provide counsel as needed.

Putney, Twombly, Hall & Hirson LLP