FlexFrac Logistics/Silver Eagle Logistics, (2012)

Docket Number:16-CA-027978
NOTICE: This opinion is subject to formal revision before publication in the bound volumes of NLRB decisions. Readers are requested to notify the Executive Secretary, National Labor Relations Board, Washington, D.C. 20570, of any typographical or other formal errors so that corrections can be included in the bound volumes.

Flex Frac Logistics, LLC and Silver Eagle Logistics, LLC, Joint Employers and Kathy Lopez. Case 162013CA2013027978

September 11, 2012



On February 6, 2012, Administrative Law Judge Margaret G. Brakebusch issued the attached decision. The Respondent filed exceptions, a supporting brief, and an answering brief. The Acting General Counsel filed cross-exceptions, a supporting brief, and an answering brief.

The National Labor Relations Board has delegated its authority in this proceeding to a three-member panel.

The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge2019s rulings, findings, and conclusions only to the extent consistent with this Decision and Order Remanding.1

1. 201c[A]n employer violates Section 8(a)(1) when it maintains a work rule that reasonably tends to chill employees in the exercise of their Section 7 rights.201d Lutheran Heritage Village-Livonia, 343 NLRB 646, 646 (2004) (citing Lafayette Park Hotel, 326 NLRB 824, 825 (1998)). We agree with the judge that the Respondent violated Section 8(a)(1) of the Act by maintaining an overly broad confidentiality rule.

In the Respondent2019s one-page at-will-employment agreement that all employees must sign, a section entitled 201cConfidential Information201d provides:

Employees deal with and have access to information that must stay within the Organization. Confidential Information includes, but is not limited to, information that is related to: our customers, suppliers, distributors; [our] organization management and marketing processes, plans and ideas, processes and plans; our financial information, including costs, prices; current and future business plans, our computer and software systems and processes; personnel information and documents, and our logos, and art work. No employee is permitted to share this Confidential Information outside the or-

1 We shall modify the judge2019s recommended Order and substitute a new notice to conform to our findings, the Board2019s standard remedial language, and the Board2019s decision in J. Picini Flooring, 356 NLRB No. 9 (2010). For the reasons stated in his dissenting opinion in J. Picini Flooring, Member Hayes would not require electronic distribution of the notice.

ganization, or to remove or make copies of any [of our] records, reports or documents in any form, without prior management approval. Disclosure of Confidential Information could lead to termination, as well as other possible legal action. [Emphasis added.]

This provision, by its terms, prohibits employees from engaging in 201c[d]isclosure201d of 201cpersonnel information and documents201d to persons 201coutside the organization201d on pain of possible 201ctermination201d or 201clegal action.201d

The Board has repeatedly held that nondisclosure rules with very similar language are unlawfully overbroad because employees would reasonably believe that they are prohibited from discussing wages or other terms and conditions of employment with nonemployees, such as union representatives2014an activity protected by Section 7 of the Act. See, e.g., Hyundai America Shipping Agency, Inc., 357 NLRB No. 80, slip op. at 12 (2011) (finding rule unlawful that prohibited 201c[a]ny unauthorized disclosure from an employee2019s personnel file201d); IRIS U.S.A., Inc., 336 NLRB 1013, 1013 fn. 1, 1015, 1018 (2001) (finding rule unlawful that stated all information about 201cemployees is strictly confidential201d and defined 201cpersonnel records201d as confidential). We apply well-established precedent here in finding the Respondent2019s rule unlawful.

The Respondent contends that the judge erred because the rule only prohibited disclosure outside the company and because the Respondent had a legitimate business interest in the rule. We do not find merit in either contention. As to the first contention, a rule such as the Respondent2019s that prohibits disclosure to anyone outside the company necessarily prohibits employees from exercising their Section 7 right to discuss their terms and conditions of employment with union representatives. See, e.g., Bigg2019s Foods, 347 NLRB 425, 425 fn. 4 (2006). As to the second contention, the Respondent admitted during the hearing and in its briefs that it did not mean to prohibit employees from discussing wages, so it never asserted2014nor, by its own admission, could it have2014a legitimate business interest in a confidentiality rule that broadly prohibits the discussion of wages or other terms and conditions of employment. Cf. Waco, Inc., 273 NLRB 746, 748 (1984) (absent a legitimate and substantial justification, a rule prohibiting employees from discussing their wages is unlawful).

Our dissenting colleague would find the Respondent2019s rule lawful, but his position cannot be squared with Board law. Citing Lutheran Heritage Village-Livonia, supra at 6462013647, our colleague correctly acknowledges that this case involves a facial challenge to the rule, that the controlling standard is whether 201cemployees would reasonably construe the language to prohibit Section 7 activity,201d and that the Board thus must evaluate the rule

from the perspective of employees who might read the rule. But he errs to the extent that he suggests (1) that unspecified 201cobjective evidence,201d apart from the rule2019s language, is required to find a violation; and (2) that the rule must be upheld if employees could reasonably construe its language not to prohibit Section 7 activity.

Neither proposition is supported by Lutheran Heritage Village. That leading decision distinguished facial challenges from cases in which a rule 201cwas promulgated in response to union activity201d or had 201cbeen applied to restrict the exercise of Section 7 rights,201d and it further explained that a rule would be upheld against a facial challenge if a coercive construction of the rule was 201cunreasonable,201d albeit 201cconceivabl[e].201d2 Board law is settled that ambiguous employer rules2014rules that reasonably could be read to have a coercive meaning2014are construed against the employer. This principle follows from the Act2019s goal of preventing employees from being chilled in the exercise of their Section 7 rights2014whether or not that is the intent of the employer2014instead of waiting until that chill is manifest, when the Board must undertake the difficult task of dispelling it. See, e.g., Lafayette Park Hotel, 326 NLRB at 828; see also 2 Sisters Food Group, 357 NLRB No. 168, slip op. at 3 (2011). Despite the dissent2019s suggestion to the contrary, the Board2019s approach in this area has met with the approval of the U.S. Court of Appeals for the District of Columbia Circuit. See Cintas Corp. v. NLRB, 482 F.3d 463, 4672013470 (D.C. Cir. 2007) (enforcing Board decision that found unlawful employer rule requiring employees to maintain 201cconfidentiality of any information concerning the company, its business plans, its partners, new business efforts, customers, accounting and financial matters201d);3 see also Brockton Hospital v. NLRB, 294 F.3d 100, 106 (D.C. Cir. 2002) (enforcing Board decision that found unlawful employer rule prohibiting discussion of 201cinformation concerning patients, associates, or hospital operations . . . except strictly in connection with hospital business201d).

Contrary to our dissenting colleague, we find that the context of the overall confidentiality rule here does nothing to remove employees2019 reasonable impression that they would face termination if they were to discuss their wages with anyone outside the company. The Respondent2019s confidentiality rule is broadly written with sweep-

2 Id.

3 In Cintas, supra, the District of Columbia Circuit explained that the Board2019s approach 201cfocuses on the text of the challenged rule, and that if the Board2019s 201ctextual analysis is 2018reasonably defensible,2019 and 2018adequately explained,2019201d extrinsic evidence, such as evidence of employees2019 actual interpretation of the rule or enforcement of the rule by the employer against employees engaging in Sec. 7 activity, is not required to find a violation. 482 F.3d at 467 (citations omitted).

ing, nonexhaustive categories that encompass nearly any information related to the Respondent. Not only does nothing in the rule suggest that 201cpersonnel information and documents201d excludes wages, one of the other categories2014201cfinancial information, including costs201d2014 necessarily includes wages and thereby reinforces the likely inference that the rule proscribes wage discussion with outsiders. Nothing about the rule would reasonably indicate to employees that its prohibitions are as limited as our colleague suggests. 201c[E]mployees should not have to decide at their own peril what information is not lawfully subject to such a prohibition.201d Hyundai America Shipping, supra, slip op. at 12. Here, as in Cintas, supra, the employer 201chas made no effort in its rule to distinguish [S]ection 7 protected behavior from violations of company policy.201d 482 F.3d at 469.4

2. The judge found that the Charging Party, employee Kathy Lopez, was terminated in violation of Section 8(a)(1) because the Respondent discharged her pursuant to the unlawful confidentiality rule 201ceven though she was not terminated for discussing wages or other protected activity.201d In Continental Group, 357 NLRB No. 39 (2011), not cited by the judge, the Board clarified that discipline pursuant to an unlawful rule is not per se unlawful. Id., slip op. at 4. For discipline to be unlawful, the employee must...

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