Employee Privacy and Outside Activities Rules Violated NLRA: NLRB

Practical Law Legal Update w-006-6586 (Approx. 6 pages)

Employee Privacy and Outside Activities Rules Violated NLRA: NLRB

by Practical Law Labor & Employment

Background

In August 2014, Cellco Partnership (Verizon) implemented a Code of Conduct for its employees (effective until April 2015, when it was replaced by a new Code of Conduct). The NLRB General Counsel alleged that five rules in the Code of Conduct were facially unlawful because employees would reasonably construe them to prohibit protected activity. The 2015 version maintained four of the facially unlawful rules from the 2014 version:

Section 1.6 Solicitation and Fundraising.
Section 2.1.3 Activities Outside of Verizon Wireless.
Section 3.3 Proper Use of Verizon Wireless' Property and Property Owned by Others.
Section 3.4.1 Prohibited Activities.

A fifth rule, Section 1.8 Employee Privacy, was revised in the 2015 version of the Code of Conduct. While most of Verizon's places of business used the 2015 Code of Conduct, some still used the 2014 version.

The sections of the Code of Conduct ultimately analyzed most heavily by the Board were Section 2.1.3 on outside activities and the 2014 version of Section 1.8 on employee privacy.

The 2014 version of Section 1.8 (Employee Privacy) read:

"Verizon Wireless acquires and retains personal information about its employees in the normal course of operations, such as for employee identification purposes and provision of employee benefits. You must take appropriate steps to protect all personal employee information, including social security numbers, identification numbers, passwords, financial information and residential telephone numbers and addresses.

You should never access, obtain or disclose another employee’s personal information to persons inside or outside of Verizon Wireless unless you are acting for legitimate business purposes and in accordance with applicable laws, legal process and company policies, including obtaining any approvals necessary under these policies."

Section 2.1.3 (Activities Outside of Verizon Wireless) stated:

"Many employees participate in an individual capacity in outside organizations (such as their local school board or homeowners' association). Memberships in these associations can cause conflicts if they require decisions regarding Verizon Wireless or its products. If you are a member of an outside organization, you must remove yourself from discussing or voting on any matter that involves the interests of Verizon Wireless or its competitors. You must also disclose this conflict to your outside organization without disclosing nonpublic company information and you must disclose any such potential conflict to the VZ Compliance Guideline. Participation in any outside organization should not interfere with your work for Verizon Wireless. To the extent that your participation infringes on company time or involves the use of Verizon Wireless resources, your supervisor’s approval is required."

An administrative law judge (ALJ) concluded that by:

Maintaining Section 1.6, Section 3.4.1, and the 2014 version of Section 1.8 of its Code of Conduct, Verizon violated the NLRA.
Maintaining Section 2.1.3, Section 3.3, and the 2015 version of Section 1.8 of its Code of Conduct, Verizon did not violate the NLRA.

Outcome

The Board majority (Members Pearce and McFerran):

Affirmed the ALJ's conclusion that Verizon violated the NLRA with its rules on:
- fundraising (Section 1.6);
- prohibited activities (Section 3.4.1); and
- employee privacy (Section 1.8, 2014 version only).
Affirmed the ALJ's conclusion that the altered 2015 version of Rule 1.8 was lawful.
Reversed the ALJ's conclusion that Section 2.1.3, Activities Outside of Verizon Wireless, was lawful, and held that it was unlawfully overbroad.

Concerning Section 1.8 (2014 version) on employee privacy, the Board majority:

Found that while employers have a legitimate interest in maintaining privacy of certain business information, employees could reasonably read the rule as prohibiting them from disclosing personal employee information or discussing terms and conditions of employment.
Rejected the conclusion that the rule was lawful because it pertained only to the disclosure of employee information acquired by the employer, not personal employee information obtained in other ways, because:
- in some circumstances, employees have a Section 7 right to obtain the names and telephone numbers of employees from their employer's records (see Rocky Mountain Eye Center, P.C., 363 N.L.R.B. No. 34, slip op. at 1 (Nov. 3, 2015));
- although the rule's first paragraph stated that the employer "acquires and retains personal information about its employees" and that employees "must take appropriate steps to protect all personal employee information," the second paragraph did not reference the first paragraph or use language to indicate that the first paragraph limited the broad reach of the second; and
- employee privacy safeguards in the Board's final rule on representation case procedures (79 Fed. Reg. 74308 (Dec. 15, 2014)) were inapposite to Section 1.8 of Verizon's 2014 code.

Concerning Section 2.1.3 on outside activities, the Board majority:

Disagreed with the ALJ's conclusion that Section 2.1.3 addressed only the ethics of employees' business decisions involving Verizon made while participating in an outside organization, instead finding that Section 2.1.3:
- related to any matter that involved Verizon's interests; and
- did not qualify what types of organizations were covered.
Found that:
- the rule could be reasonably construed as restricting participation in unions, in violation of NLRA Section 7;
- employees could reasonably fear that the rule's broad language prohibited conduct that Verizon may consider detrimental to its image or reputation or as conflicting with its interests, such as picketing or striking (see Sheraton Anchorage, 362 N.L.R.B. No. 123, slip op. at 1 (2015));
- the rule was unlawfully overbroad in preventing employees who report conflicts to an outside organization from disclosing nonpublic company information, including terms and conditions of employment; and
- the requirement that employees notify Verizon of any potential conflict was unlawful because employees would reasonably read it as requiring them, in certain circumstances, to inform Verizon of union and other protected activity (see Casino San Pablo, 361 N.L.R.B. No. 148, slip op. at 4 (2014)).

In dissent, Acting Chairman Miscimarra:

Disagreed that Verizon's maintenance of Section 2.1.3 (Employee Privacy) violated the NLRA, noting that the rule pertained only to the disclosure of employee information acquired and retained by the employer.
Agreed that the 2014 version of Section 1.8 (Activities Outside of Verizon Wireless) violated the NLRA.

Practical Implications

In Cellco, the Board determined that certain rules in an employer's Code of Conduct were overbroad and violated the NLRA. Employers should be mindful of Board decisions like this when drafting any employee policies or conduct guidelines to ensure they do not prohibit employees from engaging in protected activity under Section 7 of the NLRA, particularly those policies that could reasonably be construed as restricting employees' ability to discuss terms and conditions of employment, participate in union activity, and engage in strikes, picketing, or other economic pressure.

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