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Employment agreement provisions violate labor relations act: NLRB


A National Labor Relations Board judge has held that confidentiality and nondisparagement provisions in a nonunionized employer's employment agreement were overly broad and violate the National Labor Relations Act.

The company said it plans to appeal the decision.

Observers say it is one more example of the agency's interest in applying its mandate to nonunion workplaces.

The ruling issued Tuesday by Administrative Law Judge Joel P. Biblowitz concerned a complaint brought by Lydia E. Garza, a former mortgage broker employee of the Scottsdale, Ariz., office of Detroit-based Quicken Loans Inc. The confidentiality provision in her employment agreement called for workers to keep confidential nonpublic information related to the company, while the nondisparagement agreement prohibited employees from publicly criticizing the firm.

Shortly after Ms. Garza and five other employees left the firm, they were sued by Quicken for violating the employment agreement. Ms. Garza contended the restrictions contained in the two provisions “unlawfully restrict employees in the exercise” of their rights under the NLRA, according to the ruling. Quicken said “because of the time and expense spent in educating for violations and training its mortgage bankers, it requires them to sign the agreement in order to protect its investment in them,” the ruling said.

Focusing on the confidentiality agreement, Judge Biblowitz said, “In complying with these restrictions, employees would not be permitted to discuss with others, including their fellow employees or union representatives, the wages and other benefits they receive, the names, wages, benefits, addresses or telephone numbers of other employees,” and it would ”substantially curtail” their right to engage in concerted activities.


Similarly, referring to the nondisparagement agreement, he said, “There can be no doubt that an employee reading these restrictions could reasonably construe them as restricting his right to engage in protected concerted activities.”

The judge ordered the company to notify all its mortgage brokers that these provisions were being rescinded and would not be enforced.

The company said in a statement: “The language in Quicken Loans' employment agreement is customary and typical and complies with the law. While disappointing, the decision by the NLRB Region 28 is not unexpected. Quicken Loans has never sought to enforce its employment agreement inconsistent with the law. The company will appeal the Administrative Law Judge’s decision to the Board and will continue the judicial process until justice is served.”

Commenting on the ruling, Seth H. Borden, a partner with law firm McKenna Long & Aldridge L.L.P. in New York, said the administrative law judge here “is reacting to the current board's expansive view of employee rights and kind of pushing the envelope a little bit, although I don't see anything terribly shocking in this decision. It also reflects the current board's efforts to increase the awareness of employees in nonunion workplaces that the (NLRA) applies to them as well and provides protections for them as well.”

Molly DiBianca, an associate with law firm Young Conaway Stargatt & Taylor L.L.P. in Wilmington, Del., said the NLRB's issuance of rulings that impact the nonunion workplace, while always permitted, has “definitely been the trend for the past year, but it seems to be snowballing. It seems more and more opinions are coming out related to nonunionized workplaces.”

Confidentiality provisions in particular “really have become a target” of the NLRB, said Ms. DiBianca, who recommended employers review their confidentiality policies. “Carefully worded policies are becoming really important if you want to avoid an unfair labor practice charge,” she said.