In a recent decision, Apogee Retail LLC, the National Labor Relations Board (Board), by a 3-1 majority, held that investigative confidentiality rules are lawful, so long as they are time-limited to the investigative period. The Board held that investigative confidentiality rules that are not time-limited are subject to additional scrutiny.
The decision overrules the Board’s Obama-era approach to investigative confidentiality rules as set forth in Banner Estrella Medical Center, 362 NLRB 1108 (2015). Under that analytical framework, the Board placed the burden on the employer to determine, on a case-by-case basis, whether the business interests in preserving the integrity of an investigation outweighed the presumptive right that employees have under Section 7 of the National Labor Relations Act (“Act”) to discuss discipline or ongoing disciplinary investigations. In Apogee Retail LLC, the Board concluded that the Banner Estrella test failed for three separate reasons: (1) it did not account for precedent recognizing the Board’s duty to balance an employer’s legitimate business justifications against employees’ Section 7 rights; (2) it did not properly recognize the importance of confidentiality assurances to both employers and employees; and (3) it was inconsistent with other Federal statutes because it required an employer to evaluate the need for confidentiality on a case-by-case basis.
In Apogee Retail LLC, the Board concluded that the more appropriate test for assessing workplace rules was the test that it established in Boeing Co., 365 NLRB No. 154 (2017). Under the Boeing standard, the Board evaluates the nature and extent of the potential impact of a workplace rule on NLRA rights and the legitimate business justifications that may be associated with such a rule. After conducting such analysis, the Board will designate the rule into one of three categories: (1) Category 1, which includes rules that the Board deems lawful either because the rule either does not interfere with NLRA rights or because the potential adverse impact is outweighed by the rule’s justifications; (2) Category 2, which includes rules that warrant individualized scrutiny in each case as to whether the rule would interfere with NLRA rights, and if so, whether the adverse impact is outweighed by the rule’s justifications; and (3) Category 3, which includes rules that the Board will designate as unlawful because they would prohibit or limit NLRA-protected conduct and because the potential adverse impact is not outweighed by the rule’s justifications.
The Apogee Retail LLC case came as the result of dispute between Apogee Retail, a thrift store operator, and its employees concerning two workplace rules: (1) requiring employees to “maintain confidentiality” regarding workplace investigations into “illegal or unethical behavior”; and (2) prohibiting “unauthorized discussion” of investigations or interviews “with other team members.” The Apogee policy did not provide that either rule was limited to the investigative period.
Applying the test for workplace rules established in Boeing, the Board held that investigative confidentiality rules are lawful and fall within Category 1 where the rule is limited in its duration to the investigative period. Further, the Board held that investigative confidentiality rules that are not clearly time-limited, like those at issue with Apogee Retail, fall into Category 2, and are subject to additional scrutiny.
As a result, the Board, after overruling the Banner Estrella test and reinstating the Boeing standard, remanded the case for further proceedings to determine whether Apogee’s rules interfered with its employees’ NLRA rights, and if so, whether the legitimate business justifications for such rules outweighed the impact of such interference.
Apogee Retail LLC d/b/a Unique Thrift Store & Kathy Johnson (Dec. 16, 2019) 368 NLRB No. 144.
NOTE:
The NLRA grants private-sector workers the right to organize and be represented by labor unions and gives significant protection to employees whether or not they work in a unionized environment. This case represents a departure from the past few years of NLRB cases that were highly protective of employees and challenging for employers. This is an evolving area of the law and we recommend seeking legal counsel with specific questions regarding workplace rules and policies.