Why it matters
Workers are allowed to discuss their salaries, a National Labor Relations Board administrative law judge (ALJ) told Lowe’s Home Centers in a decision, finding that multiple versions of the employer’s rule violated the National Labor Relations Act (NLRA). Lowe’s maintained a nationwide Code of Business Conduct and Ethics with a “Confidential Information” rule that covered “all non-public information” relating to Lowe’s business, “such as customer, budget, financial, credit, marketing, pricing, supply cost, personnel, medical records and salary information.” Both this rule and a subsequent revision prohibited employees from discussing salary information with the potential for discipline if violated, the ALJ said. As employee discussions regarding wages are “the core of Section 7 rights,” the rules ran afoul of Section 8(a)(1) of the NLRA, the ALJ found, ordering Lowe’s to rescind them and inform employees of the change.
Detailed discussion
In April 2017, charging party Amber Frare filed a complaint with the National Labor Relations Board (NLRB) that Lowe’s Home Centers violated the National Labor Relations Act (NLRA) with its original and revised Code of Business Conduct and Ethics (the Code), to which its employees are bound.
The Code includes a “Confidential Information” rule that states:
“Employees must maintain the confidentiality of information entrusted to them by Lowe’s or its suppliers or customers, except when disclosure is authorized by Lowe’s General Counsel and Chief Compliance Officer or disclosure is required by law, applicable governmental regulations or legal proceedings. Whenever feasible, Employees should consult with the company’s General Counsel and Chief Compliance Officer before disclosing confidential information if they believe they have a legal obligation to do so. Confidential information includes all non-public information that might be of use to competitors of the company, or harmful to Lowe’s, its suppliers or customers, if disclosed. It includes all proprietary information relating to Lowe’s business such as customer, budget, financial, credit, marketing, pricing, supply cost, personnel, medical records and salary information.”
A subsequent revision to the Code defined “Confidential Information” as “material, non-public information, and proprietary information relating to Lowe’s business such as customer, budget, financial, credit, marketing, pricing, supply cost, personnel, medical records or salary information, and future plans and strategy.”
Lowe’s responded to the complaint, arguing that the Confidential Information provision did not prohibit employees from discussing salary information with each other but instead referred to situations involving a person entrusted with nonpublic information relating to the employer’s business. It also argued that its business justifications for the rule outweighed employees’ Section 7 rights.
But administrative law judge (ALJ) Amita Baman Tracy reached the opposite conclusion. “Employee discussions regarding wages, the core of Section 7 rights, are ‘the grist on which concerted activity feeds,’” she wrote. “As such, the Board has consistently held that rules or provisions which prohibit employees from discussing wages are unlawful.”
The ALJ also noted the new standard established by the NLRB in The Boeing Company, where it applied a new balancing test to matters involving allegedly unlawful employer rules as well as the creation of three categories of employment policies.
Category 3 features rules the NLRB designated as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule. An example of a Category 3 rule: one that prohibits employees from discussing wages or benefits with one another.
“In this instance, both versions of the Confidential Information provision may be read to preclude employees from discussing their salary information with one another, as well as nonemployees such as union representatives and Board agents, which the Board has found to infringe on employees’ Section 7 rights to discuss terms and conditions of their employment with others,” Tracy wrote.
The ALJ rejected the employer’s contention that the use of the term “entrusted” in the rule indicated a focus on keeping proprietary information confidential, not a ban on employees discussing salaries. “[T]he Confidential Information rule could not be read as [Lowe’s] offers,” according to the decision. “To the contrary, the Confidential Information rule precludes discussion of salary information. In addition, employees face discipline if they violate the Confidential Information rule in the Original and Revised Code. Therefore, the Confidential Information rule is unlawful.”
Tracy read the Boeing holding “to designate any rule prohibiting employees from discussing salary information as per se unlawful, thus bypassing the need to conduct a balancing test.” Even when conducting a balancing test, however, “the adverse impact on employees’ Section 7 rights outweighs [Lowe’s] asserted business justifications,” the ALJ wrote. “Most importantly for this analysis, [Lowe’s] failed to present any legitimate business justifications for precluding disclosure of salary information in its Confidential Information rule.”
The employer’s reasons—to prevent employees from engaging in insider trading, to avoid unethical business conduct and unfair competition, and to comply with antitrust laws—were nothing more than “bare assertions,” the ALJ said. “Thus, even applying the Boeing balancing test, [Lowe’s] Confidential Information rule, both versions, which prohibit discussion of salary information is unlawful under Section 8(a)(1) of the Act.”
Having concluded that the employer engaged in unfair labor practices, the ALJ ordered Lowe’s to rescind the Confidential Information rule and notify employees of the change.
To read the decision in Lowe’s Home Centers, LLC, click here.