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Quicken Confidentiality Agreement Found to Interfere With Certain Important Employee Rights

Mortgage loan servicer Quicken Loans Inc. ran afoul of the National Labor Relations Act when it adopted a policy prohibiting its mortgage bankers from using or disclosing personnel information or publicly criticizing the company. That was the ruling of the U.S. Court of Appeals for the District of Columbia Circuit in Quicken Loans Inc. v. NLRB, No. 14-1231 (D.C. Cir. 2016), after the National Labor Relations Board had determined that Quicken’s rules unreasonably burdened its employees’ ability to discuss legitimate employment matters, protest employer practices, and organize.

Quicken mortgage bankers were required to sign “proprietary/confidential information” and “non-disparagement” rules. Confidential information included personnel files, rosters, and handbooks. Bankers had to agree not to “publicly criticize, ridicule, disparage, or defame” the company or its management, orally or in writing, including on websites, blogs, or emails.

Lydia G. was a mortgage banker in Quicken’s Scottsdale, Arizona office. After she took a job with one of Quicken’s competitors, Quicken sued her for violating her employment agreement. Lydia filed an unfair labor practice charge with the NLRB alleging that Quicken’s confidentiality and non-disparagement rules interfered with its employees’ rights under the NLRA.

Section 7 of the NLRA protects employees’ rights to discuss the terms and conditions of their employment, criticize or complain about their employer or work conditions, and enlist others in addressing employment matters. Employers that restrict the rights guaranteed by Section 7 commit an unfair labor practice.

Whether workplace rules run afoul of Section 7 turns on whether they “would reasonably tend to chill employees in the exercise of their statutory rights,” either facially, in effect, or in application (Lafayette Park Hotel, 326 NLRB 824 (1998)).

The appellate court agreed that Quicken’s confidentiality rule directly infringed employees’ Section 7 rights. “The very information the rule explicitly forbids employees to share—personnel lists, employee rosters, and employee contact information—has long been recognized as information that employees must be permitted to gather and share among themselves and with union organizers in exercising their Section 7 rights,” the court wrote.

The court rejected Quicken’s argument that NLRB should have considered whether Lydia G. or other Quicken employees had actually construed the confidentiality rule to prohibit Section 7 activity, or Quicken had ever enforced the rule in such a way. “The validity of a workplace rule turns not on subjective employee understandings or actual enforcement patterns, but on an objective inquiry into how a reasonable employee would understand the rule’s disputed language [emphasis added].”

Such an inquiry allows NLRB to block rules that might “chill the exercise of employees’ rights by cowing the employees into inaction.” The court added that the employer’s intent is irrelevant because of “NLRA’s proactive role in safeguarding employees’ rights.”

Quicken claimed it has a “substantial and legitimate interest” in protecting sensitive information in a highly regulated and competitive business. The court noted that NLRB had left portions of the rule protecting proprietary information intact, allowing Quicken to revise and “narrowly tailor the rule to achieve its goal.”

The court called the non-disparagement rule “a sweeping gag order that would significantly impede mortgage bankers’ exercise of their Section 7 rights because it directly forbids them to express negative opinions about the company, its policies, and its leadership in almost any public forum.” Quicken’s alleged non-enforcement of the rule “could just as readily show that employees had buckled under the … threat of enforcement.”

The court concluded that NLRB “appropriately determined that employees would reasonably construe the sweeping prohibitions in Quicken’s [] rules as trenching upon their rights to discuss and object to employment terms and conditions, and to organize to promote employee interests” and that those rules ran afoul of NLRA.

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