An Employer Cannot Prohibit Its Employees From Discussing “Personnel Issues”

In the last few years, the National Labor Relations Board (NLRB) has been declaring unenforceable one confidentiality policy after another, forcing employers to balance their need to protect their confidential information and trade secrets against the right of employees to freely discuss the terms of their employment.  So, how should a business draft its confidentiality policy so that it serves its purpose, but does not land the company in hot water with the NLRB?  Last week’s Fifth Circuit Court of Appeals‘ decision in Flex Frac Logistics, L.L.C., et al. v. National Labor Relations Board provides some useful guidance.

In this case, the confidentiality provision in question prohibited Flex Frac’s employees from sharing “confidential information” outside the organization. Such “confidential information” included, but was not limited to, the company’s marketing processes, plans and ideas, financial information, costs, prices, business plans, and “personnel information and documents.”

When Kathy Lopez, Flex Frac’s employee was fired, she filed a charge with the NLRB, prompting the Acting General Counsel for the Board to file a complaint, alleging, inter alia, that Flex Frac promulgated and maintained a rule prohibiting employees from discussing employee wages in violation of Section 8(a)(1) of the National Labor Relations Act (NLRA).  The administrative law judge found that the confidentiality clause violated Section 8(a)(1) because it was overly broad and contained language employees could reasonably interpret as restricting their exercise of their Section 7 rights. In a split decision, the NLRB affirmed.  Flex Frac appealed, and the Fifth Circuit affirmed as well.

The Court of Appeals explained that under Section 8(a)(1) of the NLRA, it is an “unfair labor practice for an employer . . . to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title.”  Such rights include self-organization;  forming, joining, and assisting labor organizations; collective bargaining; and engaging “in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 28 U.S.C. § 157. Thus, a “workplace rule that forbids the discussion of confidential wage information between employees . . . patently violates Section 8(a)(1).”

Even if the workplace rule or policy does not expressly prohibit discussion of such information, it may still violate Section 8(a)(1) if the employees would reasonably construe the language of the policy to prohibit Section 7 activity.  Because the confidentiality clause at question in Flex Frac prohibited discussion of all “personnel information” and did not create an exception for discussion of wages, according to the Fifth Circuit, employees could reasonably construe its language as prohibition against discussion of wages or other terms and conditions of employment.

Importantly, the Fifth Circuit differentiated the Flex Frac policy from the confidentiality clauses upheld in the following cases:

  • Policy prohibited disclosure of “hotel-private information to employees or other individuals or  entities that are not authorized to receive that information,” but did not define “hotel-private information.” Held not to violate the NLRA because employees would reasonably interpret it to protect customers’ information and not interfere with discussion of their wages. Lafayette Park Hotel, K-Mart, 330 N.L.R.B. 263 (1999).
  • Policy stated that “Company business and documents are confidential. Disclosure of such information is prohibited.” Held not to violate the NLRA for the same reason. Lafayette Park Hotel, K-Mart, 330 N.L.R.B. 263 (1999).
  • Policy prohibited employees from disclosing “proprietary information . . . includ[ing] . . . customer and employee information, includ[ing] organizational charts and databases [and] financial information.” Held not to violate the NLRA because “employee information” was listed as an example of “intellectual property,” and would be reasonably interpreted by employees not to include information related to the terms and conditions of their employment or their wages since those are not considered “intellectual property.”  In re Mediaone of Greater Fla., Inc., 340 N.L.R.B. 277 (2003).

Unlike the confidentiality policies in these cases, the Flex Frac policy prohibited disclosure of specifically “personnel information” and failed to clarify that such information did not include “wages.” Thus, the company employees could reasonably interpret “personnel information” to include the terms and conditions of the their employment. The Fifth Circuit noted in a footnote, however, that the NLRB‘s order did not impair the majority of the company’s confidentiality policy and nothing prevented Flex Frac from redrafting its policy to require confidentiality for employee-specific information such as social security numbers, medical records, background criminal checks, drugs test, or other similar information.

The Flex Frac opinion was issued a little over a month after NLRB struck down another employer’s confidentiality policy that prohibited disclosure of “personal or financial information.” The NLRB in MCPc, Inc. v. Jason Galanter, 360 NLRB 39 (2014) found that the employer violated Section 8(a)(1) by maintaining an overly broad confidentiality rule in its employee handbook stating that “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.”  The Board found that employees would reasonably construe this rule to prohibit discussion of wages or other terms and conditions of employment with their coworkers—activity protected by Section 7.

BOTTOM LINE: In light of the above NLRB decisions and the Flex Frac opinion, employers should review their confidentiality policies to ensure that they are drafted to encompass only trade secrets and other confidential and proprietary information rather than information that could relate to wages and other terms and conditions of employment.

For assistance in drafting or auditing your company’s confidentiality policy, contact Leiza Dolghih.

Can You Fire or Get Fired for Statements on Facebook, etc.? (Social Media – Part II)

In the last couple of years, many employers have been adding Social Media policies to their Employee Manuals, often prohibiting employees from discussing all company matters publicly or from disparaging managers, co-workers, or the business itself online.  A violation of these policies has often been cited as a firing offense.  The question is how enforceable are these policies and how far can an employer go in regulating what its employees are saying about the business or the working conditions on sites such as Facebook or Twitter?

Thankfully, several opinions and memorandums issued by the National Labor Relations Board (The Board) provide some very useful guidance.  Here’s a quick summary of do’s and don’t of social media for both employers and employees:

1.  Discussions of working conditions, wages, or benefits are protected.  Under Section 7 of the National Labor Relations Act, all employees (not only the ones unionized)  have the right to “engage in … concerted activities for the purpose of collective bargaining or mutual aid or protection.” The Board considers that any social media policy that discourages workers from exercising their right to communicate with one another with the aim of improving wages, benefits or working conditions, are likely to be in violation of Section 7.

For example, in Hispanics United of Buffalo Inc. and Carlos Ortiz, 03-CA-027872, several employees posted angry comments criticizing one of the other employee’s statements that they were not doing their work.  All five were fired.  The Board ordered their reinstatement and held that the employees were united by common cause, and engaged in a concerted activity for the “purpose of mutual aid or protection” as allowed by Section 7.”

2.  Personal venting or rants are NOT protected. The Board has previously found that an employer can fire an employee for offensive and inappropriate Twitter postings that do not involve protected concerted activity.  See The Board’s Advice Memorandum to Arizona Daily Star, 28-CA-23267.  In this case, a police reporter kept making distasteful comments about Tucson’s homicide rates, criticized another department at his newspaper, and called other media people “stupid” – all from his Twitter account linked to Arizona Daily Star.  The Board found that the employee’s “conduct was not protected and concerted: it did not relate to the terms and conditions of his employment or seek to involve other employees in issues related to employment.”  Thus, the newspaper was within its rights to fire him.

3.   Disclosure of confidential information or trade secrets is NOT protected.  An employer can prohibit employees from disclosing company’s trade secrets in social media.   However, employees still retain the right to discuss their wages, workplace conditions, or employees’ or company performance under Section 7. See Point 1 above.

4. Prohibition of colorful language, expletives, distasteful remarks (also known as “Courtesy Clause”) is unlawful.  The Board has held that courtesy clauses violate the National Labor Relations Act because they may be construed to restrict employees’ rights to publicly criticize their employer.  See Karl Knauz BMW, Knauz Auto Group, 13-CA-046452.  Therefore, while, an employer might find some of its employees’ comments distasteful or rude, as long as such comments are part of a concerted activity, they are lawful and cannot be used as grounds for termination.

5.  Employee opinions are protected even if factually wrong.  The Board’s view is that as long as the purpose of a social media discussion is to come to a collective understanding or action, employees should be able to express their opinions, even if their statements are not entirely factually correct.

6.  Harassing, violent, abusive, or malicious statements are NOT protected.  Employers always retain the right to prohibit sexual harassment, workplace violence and threats of violence, and abusive or malicious activity, and should include such clause in their social media.  However, the clause should be narrowly drafted so that it does not discourage or “chill” the protected activity.

BOTTOM LINE for Employers:

1.   Have a written social media policy. Some examples can be found here.

2.  Make sure the policy is narrowly drafted and does not prohibit or discourage the employees’ right to discuss their work conditions, wages, and benefits or engage in other concerted activities.  Use the memorandums issued by The Board as your guide.

BOTTOM LINE for Employees:

Keep in mind that Texas is an at-will state of employment, which means that an employer can fire an employee at any time, for any reason (except an illegal one). Posts that are not related to the place of employment or work duties, are not protected under Section 7 and can be used by an employer as a lawful cause to fire an employee.

For my previous post regarding Social Media, click here.

Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice.  His practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.

Facebook – It’s not Just for Fun Anymore (Social Media – Part I)

During 2012, the country has been abuzz with dozens of statutes and cases dealing with social media (Facebook, Twitter, Linked-In., etc.) A new body of law is emerging, and unless you’ve kept close tabs on it, it can be very confusing, especially, considering that different states and different jurisdictions treat some of the same issues quite differently.

I expect that we’ll see an exponential increase in cases dealing with social media in 2013, which is why I would like to dedicate the next several posts to discussing where Texas currently stands on social media legal issues, in comparison to other jurisdictions.

As far as legislation is concerned, Texas is currently trying to catch up with some other states that have already passed statutes dealing with social media.

Senate Bill 118 – A Proposed Amendment to the Labor Code 

Last January, Texas senator Juan Hinojosa (D-Corpus Christi – McAllen) introduced a bill that would make it unlawful for employers to require or request that an employee or applicant for employment “disclose a user name, password, or other means for accessing a personal account or the employee or applicant …”

If Texas passes Senate Bill 118, it would join four other states – California (A.B. 1844), Illinois (H.B. 3782), Maryland (H.B. 964/S.B. 433), and Michigan (H.B. 5523) – that have already enacted similar legislation last year.

Additionally, California (S.B. 1349), Delaware (H.B. 309), Michigan (H.B. 5523), and New Jersey (A.B. 2879) have prohibited higher education institutions from requiring their students to give up their passwords.

Several other states have introduced similar bills in 2012 and 2013, but have not yet passed them: Massachusetts (H.D. 4323), Minnesota (H.F. 2963), Missouri (H.B. 2060), New York (A.B. 9654), Ohio (S.B. 351), Oregon (H.B. 2654), Pennsylvania (H.B. 2332), South Carolina (H.B. 5105), and Washington (S.B. 6637).

Finally, in February, several house representatives in U.S. Congress reintroduced the bill (H.R. 537) titled “Social Networking Online Protection Act” (SNOPA), which would prohibit employers and higher education institutions from requiring their employees and students’ social media passwords.

2.   HB 1989 – A Proposed Amendment to the Texas Civil Practice & Remedies Code

This month, Texas state representative Jeff Leach (R-Plano) proposed a bill that would allow sheriffs, process servers and other legal entities the right to serve legal papers over social media accounts, including Facebook.  As currently drafted, the bill would become effective on September 1, 2013.

If Texas House Bill 1989 is enacted, it would make the Lone Star State the first in the United States to allow for service of process via social media as an alternative means of service.  The courts in other jurisdictions have already found such service to be valid in certain circumstances.  For example, the Southern District Court of New York in Federal Trade Commission v. PCCARE247, Inc., found that service via Facebook was acceptable as long as the serving party could establish that the Facebook account indeed belonged to the person/entity being served.  Outside the United States, Australia, Canada,  New Zealand, and United Kingdom have all allowed service via Facebook or Twitter.   Texas could be next.

UPDATE (July 2013):  The Legislative Session ended on May 27, 2013.  HB 318/SB 118 was passed by the House, but then died.  HB 1989 was not passed by either chamber.

Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice.  His practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.

Employer Can Access Employee’s Cell Phone under the Stored Communications Act

In December, the Fifth Circuit Court of Appeals in Garcia v. City of Laredo, et al. found that an employer who accessed its employee’s cell phone without her permission did not violate the Stored Communications Act.

The employer, a city police department, terminated the employee after it discovered images and text messages on her cell phone that violated the departmental rules. The police department investigators actually downloaded a video and photographs from the employee’s cell phone before calling her to a disciplinary meeting at which she was fired.  The employee sued the City of Laredo claiming that all the text and data stored on her personal cell phone were protected by the Stored Communications Act and the employer violated it when it accessed the data without her permission.

The Fifth Circuit Court of Appeals, however, found that the Act, which protects electronic data, only covers information stored by an electronic communication service provider, and does not reach information stored on a cell phone. The Fifth Circuit noted that this interpretation was consistent with other courts, who had previously held that the Act applied to service providers such as phone companies and Internet or email providers, but did not apply to an individual’s computer, laptop or mobile device.

WHAT DOES THIS MEAN?  This means that while an employer cannot access your Facebook account, for example, or your cell phone records without your permission, the information that you choose to keep on your cell phone or an iPad is fair game (at least in Texas).

The moral of the story is: Don’t leave your phones or iPads lying around at work unless you want your employer to see your personal information.

Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice.  His practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.