A Contractual Non-Disparagement Provision May Violate the National Labor Relations Act

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Among the latest batch of Advice Memoranda from the National Labor Relations Board, the Office of General Counsel (OGC), weighs in on the issue of whether provisions prohibiting employee disparagement of the employer violate the National Labor Relations Act. Employers, both unionized and non-union, can look to Advice Memoranda, which contain the recommendations of the OGC to the Board on specific issues, for guidance.

In Stange Law Firm, a law firm required all staff to enter into employment agreements containing the following provision:

[D]uring and after Employee’s employment or association with Law Firm ends, for any reason, Employee will not in any way criticize, ridicule, disparage, libel, or slander Law Firm, its owners, its partners, or any Law Firm employees, either orally or in writing. However, nothing in this Section 3.2 shall be deemed to limit or prohibit Employee from engaging in concerted group activity and communications with coemployees to try to improve his or her working conditions, as provided under Section 7 of the National Labor Relations Act.

Several former employees posted negative reviews about the firm on various websites, including Glassdoor.com, Indeed.com, Avvo, Yelp, and Yahoo.business. The law firm then filed suit against them for breach of contract and defamation.

Contractual Provision Unlawfully Prohibits Disparagement of Employer. As the Board set forth in the 2017 case, The Boeing Company (which we discussed in detail in a December 2017 E-lert), workplace rules are divided into three categories, depending on whether they (1) are lawful, (2) warrant individualized scrutiny, or (3) are unlawful under the National Labor Relations Act. The OGC deemed this provision to be an unlawful Category 2 rule that restricted employees’ rights under the NLRA to criticize their employer and its policies. (Employers may lawfully prohibit employee criticism of their products or services, or of other employees, however).

Although the OGC acknowledged the existence of the savings clause in the provision, it noted that “an effective savings clause should address ‘the broad panoply of rights protected by Section 7’ as well as be prominent and proximate to the rule that it purports to inform.” This clause, while addressing some of the rights, failed to address the “full panoply” of rights, for example by referencing only coworkers and not third parties such as unions.

Negative Online Reviews Are Not Protected Activity.The OGC next determined that anonymous postings on sites such as Glassdoor.com do not amount to protected concerted activity. There was no evidence that the employees acted in concert to make the negative postings, or that the postings were intended to incite group action regarding the terms and conditions of employment. Rather, they were deemed to be unprotected individual gripes. Thus, the employer’s lawsuits were not retaliation against protected activity. To the extent, however, that portions of the lawsuits were based on enforcing the unlawful contractual non-disparagement provision, those portions were preempted by the NLRA.

Tips for Employers. In drafting non-disparagement clauses, employers must be careful. While prohibiting disparagement of co-workers, products and services is lawful, prohibiting disparagement generally of the employer, management, or policies is not. Employers may prohibit illegal conduct, such as defamation. And if an employer chooses to include a savings clause, it must specifically address the “full panoply” of rights at issue.