D.C. Circuit Upholds NLRB Finding That Employment Agreement's Confidentiality And Non-Disparagement Provisions Violated The NLRA

Cross Posted from Employer Labor Relations Blog.

Seyfarth Synopsis: The U.S. Court of Appeals for the D.C. Circuit recently denied Quicken Loans, Inc.'s petition for review of an NLRB decision finding that confidentiality and non-disparagement provisions in the company's Mortgage Banker Employment Agreement unreasonably burdened employees' rights under Section 7 of the NLRA.

Back in 2013, an NLRB administrative law judge found that certain confidentiality and non-disparagement provisions contained in Quicken's Mortgage Banker Employment Agreement violated the NLRA (see our earlier blog post here). The Board agreed with the ALJ, and the Company petitioned the D.C. Circuit for review. Recently a three-judge panel of the D.C. Circuit denied the Company's petition for review and granted the NLRB's cross-application for enforcement, finding that there was nothing arbitrary or capricious about the Board's decision and there was no abuse of discretion in the Board's hearing process (Case No. 14-1231).

Facts

As a condition of employment, mortgage bankers were required to sign a Mortgage Banker Employment Agreement that included a confidentiality provision and a non-disparagement provision. The confidentiality provision prohibited employees from disclosing nonpublic information regarding the company's personnel, including personnel lists, handbooks, personnel files, and personnel information of coworkers such as phone numbers, addresses, and email addresses. The non-disparagement provision prohibited employees from publicly criticizing, ridiculing, disparaging or defaming the company or its products, services, policies, directors, officers, shareholders or employees.

Court's Reasoning

The D.C. Circuit noted that its review of the Board's decision was limited, as Congress has entrusted the Board with implementing Sections 7 and 8(a)(1) of the Act and determining when an employer's workplace rules run afoul of those provisions. The three-judge panel noted that the Board's determinations are therefore entitled to considerable deference and will be sustained as long as the Board "faithfully applies" the legal standards and its textual analysis of a challenged rule is "reasonably defensible" and adequately explained.

In finding that the Board properly determined that the confidentiality provision violated employees' Section 7 rights, the court noted that the...