NLRB Upholds Legality of Facially-Neutral Rules Requiring Confidentiality During Investigations

Continuing its string of decisions reversing positions taken by the Obama Board, the National Labor Relations Board decided Apogee Retail LLC, No. 27-CA-191574 on December 16, 2019. Apogee Retail applied the approach articulated two years ago in Boeing for evaluating whether a facially-neutral employment rule violates the Act. In doing so, the Board reemphasized that such rules must be evaluated from the perspective of a reasonable employee and that “[t]he reasonable employee does not view every employer policy through the prism of the NLRA.” In its decision, the Board demonstrates that NLRA rights must be balanced against the legitimate, and often compelling, justifications employers have for facially-neutral workplace rules.

Apogee Retail reversed the NLRB’s controversial 2015 decision in Banner Estrella Medical Center, which had made it illegal for employers to maintain rules or policies requiring confidentiality of employees during ongoing workplace investigations. Applying the balancing test it articulated in Boeing, the Board concluded that a facially-neutral rule mandating confidentiality during investigations is presumptively legal, and an employer can require confidentiality even after the investigation if a legitimate business interest outweighs the impact on employees’ rights under Section 7 of the Act.

A Closer Look at the NLRB’s Decision

Boeing articulated a standard that classifies facially-neutral rules into three categories. Apogee Retail first determined that rules that limit the confidentiality requirement to the time investigations are taking place fall into Boeing’s category 1 and are always lawful because, reasonably interpreted, they do not interfere with Section 7 rights or the potential impact on Section 7 rights is outweighed by legitimate justifications. The Board concluded that although confidentiality during an investigation may sometimes affect employees’ Section 7 rights to discuss wages and/or terms and conditions of employment, any impact on those rights is “comparatively slight” because of the “numerous and self-evident” reasons underlying an employer’s need for confidential investigations. The Board noted four of the most compelling employer interests: (1) ensuring the integrity of the investigation; (2) obtaining and preserving evidence while employees’ recollection of relevant events is fresh; (3) encouraging prompt reporting of a range of workplace issues; and (4) protecting employees’ sensitive personal information. In balancing employer interests and employees’ Section 7 rights, the Board stated that confidentiality rules limited to ongoing investigations do not substantially restrict employees from discussing wages, discipline, or incidents that could result in discipline. Instead, such rules prohibit discussion of the actual investigation and the information obtained during the investigation by those who actively participate in it. Therefore, the Board held, investigative confidentiality rules that are limited to ongoing investigations are always lawful under the Boeing framework.

The Board also concluded that confidentiality rules or directives that are not explicitly limited to the duration of an investigation fall within Boeing’s category 2, which requires case-by-case individualized scrutiny. In analyzing the legality of a category 2 rule, the Board balances the extent to which the rule interferes with Section 7 rights against the employer’s justifications for the rule. Because the record presented to the Board was inadequate for it to conduct the required individualized analysis regarding the justification for requiring confidentiality after investigations concluded, the Board remanded the case for further proceedings.

Apogee Retail criticized the standard Banner Estrella had imposed on employers to prove that confidentiality was necessary in any particular investigation because witnesses needed protection, evidence was in danger of destruction, testimony was in danger of fabrication, and/or there was a need to prevent a cover-up. The Board was particularly critical of the Banner Estrella standard, as it “ignored” the importance of confidentiality assurances to both employers and employees during ongoing investigations, and was occasionally “inconsistent with other Federal guidance,” including the broad confidentiality expected by the Equal Employment Opportunity Commission and Occupational Safety and Health Administration for employer investigations of harassment, discrimination, and safety issues.

Member Lauren McFerran, who had been in the Banner Estrella majority, dissented. Member McFerran argued that the majority “[a]gain revers[ed] precedent without notice or good reason.” She likened the decision to allowing employers to enforce “gag rules over their workers” related to investigations and asserted that the decision would result in workers choosing “safe silence over risky speech.”