Wednesday, February 21, 2018

Beware Of Mandating Confidentiality – The EEOC And NLRB Provide Cautionary Tales

The flurry of high-profile harassment allegations across various industries (e.g., the movie industry, the Illinois General Assembly, colleges and universities, and most recently professional basketball) has drawn the public’s attention to the issue of sexual harassment. The headlines are filled with stories of sexual harassment in the workplace causing employers to react quickly and appropriately to complaints of sexual harassment. How that is done is important as the investigation and settlement agreements can cause a myriad of unanticipated legal problems. Recent developments-and scrutiny-from National Labor Relations Board (“NLRB”) and the Equal Employment Opportunity Commission (“EEOC”), however, shed new light on addressing both investigations and settlement agreements.

With respect to confidentiality during the investigative process, the NLRB recently issued a decision concerning confidentiality that should give employers pause when considering whether to include confidentiality provisions during the course of an investigation. In Costco Wholesale Corporation and Teamsters Local 592, International Brotherhood of Teamsters, Case 05–CA–169958, a Costco employee was accused of making discriminatory comments to a coworker during an argument at work. When the Costco manager questioned the employee during his investigation, the manager concluded the interview by telling the employee to keep it confidential. The employee was subsequently fired and filed a charge at the NLRB. Although neither the employee nor his union objected to the manager’s instruction, the NLRB concluded that the manager’s single sentence violated the National Labor Relations Act because it would “reasonably tend to chill employees” in their exercise of their rights to discuss the terms and conditions of employment with others. It should be noted that such an instruction can be issued when the circumstances justify a substantial need for confidentiality, such as a risk of evidence being destroyed or witnesses being coerced. In Costco Wholesale Corporation and Teamsters Local 592, International Brotherhood of Teamsters, Costco did not demonstrate or even provide evidence to support such a need.

Confidentiality provisions in settlement agreements have recently been scrutinized by the EEOC. Recently, the EEOC has issued new guidance respective to handling sexual harassment issues, particularly settlement agreements designed to resolve such complaints early and to avoid costly and often unnecessary litigation. In December 2017, the EEOC indicated that it will be keeping a close eye on settlement agreements to ensure that the agreements do not prohibit employees from filing an EEOC charge relating to sexual harassment by way of confidentiality provision contained within a settlement agreement. While employers can legally insist on including confidentiality provisions in settlement agreements, employers should make certain that the employee is not in any way inhibited from filing a charge with the EEOC or cooperating with an EEOC investigation.

There are several takeaways from these developments at the NLRB and EEOC.

First, while there may often be good reasons for wanting to maintain confidentiality, especially when the investigation involves a sensitive topic such as sexual harassment or assault, employers need to evaluate if each particular investigation requires a confidentiality instruction. Such a directive must be defensible. Even before interviewing witnesses, an assessment must be made as to whether there is a risk that evidence will be destroyed, witnesses will collude, and/or witnesses will be coerced. To that end, employers should be careful when conducting investigations and proceed with caution when requesting confidentiality.

Second, while a confidentiality provision is a legal aspect of a settlement agreement that protects an employer’s interests, care should be taken with the language. The provision should be clear that, despite the confidentiality obligation, an employee still is permitted to file an EEOC charge.

Please let us know if you have questions about these developments or if you need any assistance with sexual harassment investigations or drafting confidentiality provisions to be made part of a settlement agreement.