NLRB: A Houston Employer Violated the NLRA by Firing a Non-Union Employee for Discussing Salary Information with Other Employees

A recent NLRB case provides an excellent illustration of the potential effect of section 7 of the NLRA in a non-union environment.  The employer, Jones & Carter, Inc., is a Houston engineering firm.  Lynda Teare, who was a training coordinator, discussed salary information with two other employees.  She was then terminated.  She filed a charge with the Board, claiming that she had been wrongfully terminated for violating a company policy prohibiting employees from discussing salary information.

At the hearing before the administrative judge, the company's HR director testified that the company had not fired Ms. Teare for discussing salary information, and actually went so far as to deny that the company had a policy against discussing salary information.  Instead, the HR director claimed that Ms. Teare was fired for harassing another employee (who was one of the employees with whom she had discussed salary information).

This testimony backfired.  The NLRB's general counsel presented evidence concerning the position that the company had taken at the TWC hearing on Ms. Teare's application for unemployment compensation:

On January 20, 2011, Respondent, through its HR department, filed its initial written response to Teare’s unemployment claim. Respondent’s written response specifically confirmed that Teare was terminated by Cotton for discussing confidential information pertaining to an employee’s salary. . . .

. . . When asked the basis for Teare’s discharge [during the hearing before the TWC], Williams testified that it was brought to Respondent’s attention that Teare was discussing salary information with other employees.  Williams went on to explain that Teare’s doing so violated a company policy that prohibits employees from discussing other employees’ salaries unless the employee is discussing his or her own salary with the employee’s supervisor. Williams clarified that the company policy provides that under no circumstances will financial matters concerning either Respondent’s clients or the firm be discussed with outsiders or friends. When asked by the hearing officer if this policy prohibited the discussion of employees’ salary information, Williams responded "Yes ma’am.”

The administrative judge found that Ms. Teare was fired for violating a company policy against discussing salary information.

The administrative judge noted that it is well settled under NLRB precedent that such a policy violates section 7 of the NLRA.

Thus, the Board has long held that an employer cannot lawfully prohibit employees from discussing matters such as their pay raises, rates of pay, and perceived inequities.  Automatic Screw Products, Inc., 306 NLRB 1072 (1992); Brunswick Food & Drug, 284 NLRB 663 (1987). Accordingly, when an employer forbids employees from discussing their wages among themselves without establishing a substantial and legitimate business justification for its policy, the employer violates the Act.  Waco, Inc., 273 NLRB 746, 748 (1984). Over the years, the Board has dealt with an abundance of cases involving employers’ confidentiality rules and the issue of employees’ Section 7 rights. In its recent decision in Flex Frac Logistics, 358 NLRB No. 127 (2012), the Board reiterated that an employer violates the Act when it maintains a work rule that reasonably tends to chill employees in the exercise of their Section 7 rights. Citing its prior decisions in Lutheran Heritage Village-Livonia, 343 NLRB 646, 646 (2004), and Lafayette Park Hotel, 326 NLRB 824, 825 (1998), enfd. 203 F.3d 52 (D.C. Cir. 1999), the Board went on to explain that nondisclosure rules with overly broad language interfere with employees’ Section 7 rights when employees would reasonably believe that they are prohibited from discussing wages or other terms and conditions of employment.

The administrative judge thus awarded relief to Ms. Teare.  Jones & Carter was ordered to reinstate Ms. Teare (which she declined) and to pay her $107,000.00 in back pay, 401(k) contributions, medical expenses, and interest.  The NLRB adopted the administrative judge's order.

This case illustrates the benefits of section 7 to employees and the risks to employers.  Ms. Teare was an at-will employee of a non-union company in a right to work state.  Nonetheless, she was protected by section 7 of the NLRA, and the employer was apparently unaware that section 7 could apply to its actions.

David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes