In a decision that could render illegal several common personnel policies, the National Labor Relations Board has held that an employer violated federal law by enacting rules requiring employees to perform only work during working hours, maintain the confidentiality of personnel files, and voice complaints to their supervisors or human resources rather than to each other.  The Board also struck down workplace policy provisions that prohibited disclosure of electronic messages to unauthorized persons and prevented workers from discussing matters that were under investigation by the employer’s human resources department. 

The Board held that Hyundai America Shipping Agency, Inc., a non-union international shipping company based in Texas, had committed an unfair labor practice by “maintaining or enforcing” rules that the Board found might “reasonably tend to chill employees” in the exercise of their right to form unions, bargain collectively, and act together for their mutual aid or protection.  

The decision continues the Board’s expansion of its enforcement of federal labor law in the non-union workplace. Congress created the Board in 1935 as part of the federal law that affirmed the right of workers to form labor unions and bargain with employers.  Through the years, the Board has focused predominantly on union elections and unfair labor practice charges. 

But the reach of federal labor law extends to most non-union as well as union workplaces.  The current Board has made clear its intention to enforce its interpretation of federal labor law in workplaces throughout the nation, regardless of whether they are covered by a collective bargaining agreement.

In its Hyundai opinion, the Board upheld the administrative law judge’s decision that Hyundai’s rule prohibiting employees from “[p]erforming activities other than Company work during working hours” was “facially invalid as it is overly broad.”  The Board reasoned that employees might reasonably believe that the rule prevented them from engaging in union solicitation or activities “even during breaks and lunches.”  The phrase “working hours,” according to the ALJ’s decision adopted by the Board, “connotes periods from the beginning to the end of work shifts, periods that include the employees’ own time, such as lunch and break periods.” 

Hyundai’s policy concerning employee personnel files stated: “Any unauthorized disclosure of information from an employee’s personnel file is a ground for discipline, including discharge.”  The Board adopted the ALJ’s conclusion that this rule was “unlawful as it is written so broadly as to prohibit employees’ disclosure of any information contained in personnel files,” including information like wages or disciplinary actions which the Board has held that employees have a right to discuss.

Another of Hyundai’s policies encouraged employees to “[v]oice your complaints directly to your immediate supervisor or to human resources through our ‘open door’ policy” and reminded employees that “[c]omplaining to your fellow employees will not resolve problems.”  The Board held that this policy violated federal labor law because it prohibited employees from speaking to co-workers about terms and conditions of employment.  The ALJ had found that the policy stated more than a preference that employees not complain to one another, but rather stated a “directive” that “implicitly prohibits employees from making complaints to other employees or entities.” 

The Board also found illegal a provision of Hyundai’s Electronic Communications and Information Systems policy.  The policy, which governed employees’ use of the company’s e-mail, messaging, and telephone systems, cautioned that “employees should only disclose information or messages from these [sic] systems to authorized persons.”  The ALJ wrote, and the Board agreed, that while an employer has the right to restrict the use of its electronic communications systems to company purposes only, the policy as written “could reasonably include discussions of wage and salary information, disciplinary actions, performance evaluations, and other kinds of information that are of common concern among employees, and which they are entitled to know and discuss with each other.”  The ALJ wrote that the employer should have limited the prohibition to matters that are “truly ‘confidential,’ and which do not involve terms and conditions of employment.”  “[Hyundai’s] employees should not have to decide at their own peril what information is not lawfully subject to such a prohibition,” the ALJ wrote.

Also illegal according to the Board was Hyundai’s unwritten but routinely communicated rule prohibiting employees from discussing personnel matters that the company was investigating.  Noting that the company routinely admonished employees not to discuss investigations in every case, the ALJ wrote that, “without any individual review to determine whether such confidentiality is truly necessary,” the rule was “overly broad and discriminatory.”  The Board held that the company could warn employees not to discuss an ongoing investigation only where it has determined that testimony is in danger of being fabricated, witnesses need protection, or evidence is in danger of being destroyed.  Absent a valid reason for such concerns, the company could not lawfully order its employees to keep the investigation confidential, the Board held. 

The Board reversed the ALJ’s decision that two additional Hyundai policies were unlawful.  The ALJ had held that the company’s policies prohibiting “harmful gossip” and “negative attitude” also violated federal law.  Two of the three members of the Board disagreed, and held that it was unlikely those rules would be construed by employees as prohibiting protected, concerted activity.

Ironically, the ALJ and two members of the three-member Board voted to uphold Hyundai’s discharge of the employee at the center of the case.  The employee had “engaged in a number of actions – unrelated to any protected, concerted conduct – that significantly troubled both management and her coworkers,” the Board wrote.  The employee’s misconduct had included, among other things, giving an unauthorized refund to a customer and then lying to the company about it, encouraging other employees to “exaggerate” complaints to human resources, breaking into an apartment where two of her co-workers lived and then calling them at work to tell them where she was, and making an inappropriate sexual comment to a co-worker.  There was also evidence that the employee had used marijuana at work.  Despite all this, Board member Mark Pearce voted that her discharge was unlawful. 

The Hyundai decision gives all employers yet another set of issues to consider when reviewing personnel policies for legal compliance.  It serves as a particularly acute reminder to non-union employers who may never have considered how federal labor law might apply in their workplaces. 

Many common personnel policies, including most policies that require or even encourage employees to maintain confidentiality about personnel-related matters of any kind, are unlikely to withstand scrutiny under the analysis the Board used in this decision.  Although it is clear that the Board frowns on any policy or practice that compels confidentiality or restricts free discussion of personnel matters, the standard it will use to evaluate employer policies remains vague.  Until the Board provides more guidance about how it will analyze employer policies and offers direction about what policy provisions it finds acceptable, it will be difficult for employers to be confident their policies and practices are in compliance.  As the Board continues its current activist phase, we will continue to keep you updated.

As always, this letter is for informational purposes only, is not intended as legal advice and is not a substitute for independent legal analysis and advice on a particular issue. Please contact an attorney in Steptoe & Johnson’s Labor Department if you would like further information on these matters.

For more than 20 years, Rodney Bean has provided practical, no-nonsense advice to help leading employers develop and apply labor and human resources strategies that are both compliant and prudent. He regularly counsels employers on most aspects of federal and state employment law, and has broad experience in wage and hour compliance and affirmative action planning.
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