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When Can an Employer Insist on Confidentially in an HR Investigation? DC Circuit Relaxes Standard Set by the NLRB

April 17, 2017

On March 25, 2017, in Banner Health Systems v NLRB, the United States Court of Appeals for the DC Circuit refused to enforce an order of the National Labor Relations Board's (Board) finding that an employer violated Section 7 of the National Labor Relations Act (Act) by maintaining “a categorical policy of asking employees not to discuss certain kinds of human resources investigations.”

Banner Health received a good deal of notoriety a few years ago (click here for more info).  Many commentators said that the Board’s 2012 decision essentially killed confidentiality requirements in HR investigations since it set a nearly impossible standard for employers to meet before asking employees not to discuss an ongoing investigation.

The Board's decision established a test that the employer had to meet on a case-by-case basis in order to maintain an investigative non-disclosure policy:  the employer must prove in a particular situation that it had “legitimate and substantial business justification that outweighs the employee's Section 7 rights to prohibit employees from discussing ongoing investigations.”

The court found that there was no factual basis to support the Board's decision and refused to enforce it.  In the opinion, the court cited a more employer-friendly test:  “the employer must show, on a case-by-case basis, that confidentiality is necessary based on objectively reasonable grounds for believing that the integrity of the investigation will be compromised without confidentiality.”

In deciding the case, the court did not rely on this easier burden on the employer. Instead, it refused to enforce the decision because there was no evidence to support the Board's conclusion that the employer had a blanket or categorical confidentiality policy.

On a separate issue, the court enforced the Board's decision that the employer's policy – which stated that employees were prohibited from discussing their salary and working conditions – violates Section 7.  This holding is not significant as it is well-established law.

The DC Circuit's decision is not necessarily binding on the Board, as the Board believes that only its own decisions are precedential.  But this decision does provide some breathing space for HR investigations, and it gives HR professionals some latitude to require confidentiality in sensitive situations where there are reasonable grounds to believe that disclosure of information by interviewees could compromise the investigation.  The less restrictive test articulated by the DC Circuit may also be adopted in future cases by a newly constituted Board appointed by Pres. Trump.

Editor’s Note:  This article was written by guest authors Thomas P. Brady and Daniel J. Bretz of the law firm Clark Hill, and edited and printed by AGC with permission.  If you have questions about the case or how to proceed in this evolving area of the law, you can reach Tom Brady at (313) 965-8291, tbrady@clarkhill.com, or Dan Bretz at (313) 965-8366, dbretz@clarkhill.com.

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