By:  Ashley Kircher

On Tuesday, an NLRB administrative law judge ruled that two provisions in an employment agreement signed by all of Quicken Loans, Inc.’s mortgage bankers violated Section 8(a)(1) of the National Labor Relations Act.  See Quicken Loans, Inc., Case No. 28-CA-75857.  ALJ Joel Biblowitz found that the provisions, which were meant to protect confidential information and prevent employees from disparaging the company, were overly broad and unlawfully hindered employees’ rights to engage in protected concerted activity.

The proprietary/confidential information provision prohibited employees from disclosing non-public information regarding the company’s business or personnel, including personnel lists and phone numbers and addresses of coworkers, to any person, business or entity.  The non-disparagement provision prohibited employees from publicly criticizing, ridiculing, disparaging or defaming the company or its products, services, policies, directors or officers. 

In examining whether these provisions violated the Act, the ALJ explained that the appropriate inquiry is whether the rules would reasonably tend to chill employees in the exercise of their Section 7 rights.  He also noted that the line between lawful and unlawful restrictions “is very thin and often difficult to discern.”  The ALJ nonetheless concluded that there could be “no doubt” that an employee reading the provisions could reasonably construe them as restricting his rights to engage in protected concerted activities. 

With respect to the confidentiality provision, the ALJ found that in complying with it, employees would not be permitted to discuss the wages and other benefits they receive with their fellow employees or union representatives, a substantial curtailment of their Section 7 rights.  With respect to the non-disparagement provision, the ALJ reasoned that within certain limits, employees are allowed to criticize their employer and its products as part of their Section 7 rights, and that a reasonable employee could conclude that the non-disparagement provision prohibited them from doing so.

The ALJ ruled that the company had violated the Act despite the fact that a manager testified that to his knowledge, no employees had ever been disciplined for violating the agreement.  On this point, the ALJ noted that where rules are likely to have a chilling effect on Section 7 rights, the Board may conclude that their maintenance is an unfair labor practice even absent evidence of enforcement.   

The ALJ’s decision recommends that the company be ordered to post a notice and notify all of its mortgage bankers nationwide that it has rescinded the two provisions and will not prohibit employees from discussing the terms and conditions of their employment in a manner protected by the Act.

The company plans to appeal the ALJ’s decision to the Board.  The decision is one of many recent decisions in which workplace rules were construed as unlawfully restricting employees’ Section 7 rights.  It also highlights the need to not just draft and examine employee handbooks and policies for possible non-compliance with the Act, but employment agreements as well.