The Fraud Examiner


Attention Employers: It’s Time to Update Your Confidentiality Policies
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NLRB bans blanket confidentiality policies for workplace investigations

By Ron Cresswell, J.D.

August 2015


It is common practice for employers to prohibit their employees from discussing ongoing workplace investigations. Many employers believe that this restriction is necessary to ensure the integrity and fairness of investigations involving employee misconduct. As a result, employers often have policies that require confidentiality in all workplace investigations.

According to a 2015 decision by the National Labor Relations Board (NLRB), these policies are illegal. The decision, known as Banner Estrella, states that employers cannot enforce a blanket policy requiring confidentiality during workplace investigations. Because of this decision, many employers will need to update their policies and human resources (HR) practices.


The NLRA and the NLRB

The NLRB is the federal agency charged with enforcing the National Labor Relations Act (NLRA), which protects the rights of private-sector workers to unionize and to engage in collective bargaining. Section 7 of the NLRA guarantees employees the right to engage in “concerted activity for their mutual aid or protection.” According to the NLRB, this language protects communications between employees regarding the terms and conditions of their employment. That interpretation of Section 7 is the legal foundation of the Banner Estrella decision.

Although the NLRA is usually discussed in connection with labor unions, Section 7 applies to all employees, even if they are not union members.


The 2012 Decision

The Banner Estrella case involved a health care employer that had a policy regarding employee complaints. Under the policy, when an employee made a formal complaint, the employer’s HR consultant was required to read aloud from a form. One of the items on the form instructed the complaining employee not to discuss the investigation with co-workers.

In 2012, the NLRB ruled that the employer violated Section 7 by imposing a blanket confidentiality requirement on all workplace investigations. This decision was overturned on appeal, however, after the U.S. Supreme Court ruled that members of the NLRB were not properly appointed. The case was returned to the NLRB for reconsideration.


The 2015 Decision

On June 26, 2015, the NLRB issued a second decision in the Banner Estrella case, reaching the same conclusion as in its first decision. The NLRB ruled that employees have a right, under Section 7 of the NLRA, to discuss discipline or ongoing disciplinary investigations involving themselves or co-workers. Therefore, a blanket confidentiality policy violates the NLRA if it applies to all workplace investigations.

Note that Banner Estrella does not ban confidentiality requirements for all workplace investigations. Instead, it prohibits employers from adopting confidentiality requirements that apply to all investigations, or to all investigations of a particular type. According to the NLRB, employee discussions may be restricted if the employer can show that it has “objectively reasonable grounds” for requiring confidentiality. The decision states that employers must proceed on a case-by-cases basis, determining whether confidentiality is necessary based on the circumstances of each case.

It is not enough to have a generalized concern about the integrity of an investigation. In Banner Estrella, the employer’s form stated, “when people are talking it is difficult to do a fair investigation and separate facts from rumors.” This statement did not justify the confidentiality requirement.

The NLRB noted that the following situations might constitute objectively reasonable grounds for requiring confidentiality in a particular case:

Witnesses need protection

Evidence is in danger of being destroyed

Testimony is in danger of being fabricated

There is a need to prevent a cover up

There may be other factors that justify confidentiality, but the four examples above are the only situations mentioned in the decision.


Takeaways

Banner Estrella prohibits employers from imposing a blanket confidentiality requirement on employees who are involved in workplace investigations. Employers should review their policies to determine whether they have such a confidentiality requirement. If so, the policy should be revised. Such policies may be found in employee handbooks or manuals. In addition, various forms might need to be updated.

Informal policies or practices also must be addressed. For example, it may be the practice of an employer’s HR professionals to request confidentiality from every employee who is interviewed as part of a workplace investigation. In this situation, the HR professionals will need to be retrained.

Although blanket confidentiality policies are prohibited, employee communications may be restricted during individual investigations if the employer can show objectively reasonable grounds for requiring confidentiality. HR professionals and investigators should be trained to determine, on a case-by-case basis, whether confidentiality is required. The determination should be made as soon as possible. In Banner Estrella, the NLRB listed four situations that might constitute objectively reasonable grounds for confidentiality. These situations, which are listed above, should be used as guidance.

Employers have the burden of proving that a confidentiality requirement is legally justified. If it is determined that confidentiality is necessary during an investigation, this decision must be documented by contemporaneous notes. The notes should include the specific grounds for the confidentiality requirement. Generalized concerns are insufficient.

Finally, a restriction on employee communications should be narrowly tailored to address only the specific grounds for the confidentiality requirement. A confidentiality requirement may be illegal if it is too broad. The best practice is to have all such documents drafted or reviewed by a qualified attorney.



Contact the ACFE
For more information, contact Sarah Hofmann, Public Information Officer, at (512) 478-9000 ext. 324 or SHofmann@ACFE.com.