Confidentiality policies: What court says about pay info

Chances are your confidentiality policy doesn’t specifically ban employees from talking about their paychecks with one another, but it can still potentially get you in legal trouble regarding pay-related info.

That’s one of the important takeaways from a recent court ruling on the scope of a company’s confidentiality policy.

Financial and personnel info

In Flex Frac Logistics LLC, et al., v. National Labor Relations Board (NLRB), the case centered around the legality Flex Frac’s “confidentiality” policy.

Flex Frac required all employees to sign an at-will employment agreement that included a confidentiality policy that prohibited workers from disclosing any confidential info, including “financial information, including costs, prices … personnel information and documents.”

When an employee violated the policy, she was promptly fired. Following her termination, the employee filed an unfair labor practice charge with the NLRB.

Her claim: Flex Frac’s confidentiality rule was unlawful because it restricted her right to engage in activities that are protected under Section 7 of the National Labor Relations Act (NLRA). This section of the NLRA is meant to protect workers and allow them to discuss the terms and conditions of their employment, including their wages.

Because Flex Frac’s policy prohibited the discussion of both “financial information” and “personnel information,” the NLRB said workers could:

“reasonably believe that they are prohibited from discussing wages or other terms and conditions of employment with nonemployees, such as union representatives — and activity protections by Section 7 of the Act [the NLRA].”

Not just for unions

Many times employers tend to ignore cases involving the NLRB. After all, if they don’t have a union, it doesn’t really apply to them, right? Not necessarily — particularly in this case. Employers can’t discourage workers from discussing their wages in any way — especially not via a policy that categorizes pay as “confidential info” that is forbidden from being discussed in the workplace.

The lesson in this case is clear: Avoid any overly broad language in your policies where pay can be interpreted as “confidential info” that employees are forbidden from discussing. In addition, you may want to explicitly carve out or remove pay or benefits info when drafting the language of your confidentiality policy.

This post originally ran on our sister site, HR Benefits Alert.