U.S. Appeals Court finds
confidentiality provision violates U.S.
labor law
Publication Date: 3 June 2014 | Author(s): Adam...
2
labor law.
Originally posted on the Ius Laboris Knowledge Base:
www.globalhrlaw.com
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U.S. Appeals Court finds confidentiality provision violates U.S. labor law

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The Fifth U.S. Circuit Court of Appeals (the federal appeals court for the states of Texas, Louisiana, and Mississippi) recently found that an employer violated U.S. labor law by maintaining a confidentiality agreement prohibiting disclosure of “financial” and “personnel information.” Full article first published on our Knowledge Base (www.globalhrlaw.com), written by FordHarrison, the Ius Laboris USA member firm.

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U.S. Appeals Court finds confidentiality provision violates U.S. labor law

  1. 1. U.S. Appeals Court finds confidentiality provision violates U.S. labor law Publication Date: 3 June 2014 | Author(s): Adam Dougherty, adougherty@fordharrison.com, Dylan King, dking@fordharrison.com Member Firm(s): FordHarrison Country: United States Executive Summary: The Fifth U.S. Circuit Court of Appeals (the federal appeals court for the states of Texas, Louisiana, and Mississippi) recently found that an employer violated U.S. labor law by maintaining a confidentiality agreement prohibiting disclosure of “financial” and “personnel information.” Background This case involved a non-union employer that required its employees to agree to a confidentiality clause defining confidential information to include, among other things, the company’s financial information and personnel information and documents. The agreement prohibited employees from sharing confidential information outside the organization and from removing or copying company records in any form without prior management approval. The National Labor Relations Board (the NLRB or Board) found that the agreement violated U.S. labor law, and the Fifth Circuit upheld this decision. The court held that the terms used in the employer’s confidentiality agreement, including “financial information” and “personnel information,” necessarily included wages. Thus, an employee was likely to infer that the rule proscribed wage discussions with outsiders in violation of U.S. labor law. Employers’ Bottom Line: Although this decision is not binding on courts outside the Fifth Circuit, it follows the NLRB’s trend of invalidating broadly worded confidentiality polices. Accordingly, all employers (even those without a union) must use care in drafting employee confidentiality agreements. Even if a confidentiality agreement does not expressly prohibit discussion of the terms and conditions of employment, provisions in the agreement that could reasonably be construed as doing so may create liability under U.S.
  2. 2. 2 labor law. Originally posted on the Ius Laboris Knowledge Base: www.globalhrlaw.com About Ius Laboris Ius Laboris is an alliance of law firms offering employers cross-border employment and pensions law advice. It has 1,300 specialist HR lawyers in over 150 cities and 44 countries. Ius Laboris offers access to the best local HR law experts in one global team with 20% more ranked employment lawyers (Chambers & Partners, November 2013) than any other global HR legal services organisation. Further, Ius Laboris has 50% more recommended lawyers than its nearest rival in a recent survey in PLC's employment law guide. Clients include many household names as well as multinational companies in all sectors ranging from energy, retail and technology to pharmaceuticals. For more information on Ius Laboris, please visit iuslaboris.com.

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