Posted on: 11/30/2011
Gerard Morales. Joseph A. Kroeger
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Duty of Loyalty in the Employment Context
An employee owes a duty of loyalty to his company, and nevertheless decides to disclose internal company information to third parties. The individual knows this disclosure will cause economic harm to his company, but does it anyway. Can the individual’s actions be protected under the National Labor Relations Act (NLRA)? Under a recent decision by the National Labor Relations Board (NLRB), analogous statements were found protected under Section 7 of the NLRA and the employer was required to reinstate and pay damages to the disloyal employees.
The Facts in MasTec
The case was MasTec Advanced Tech., 357 NLRB No. 17 (7/21/11). A group of employees protested a new policy to their employer and were not satisfied with the employer’s response. The employees proceeded to get into their company vans, drive as a group to the local television station and accuse their employer on live television of instructing them to lie to the company’s customers. The employees were terminated for their statements.
There was no dispute that the employees were engaged in concerted activity under Section 7 of the NLRA. “Concerted Activity” encompasses activity by two or more employees or activity by a single employee for or on behalf of other workers or even by one employee who is acting alone to initiate group activity, so long as the activity relates to terms and conditions of employment. Meyers Industries (II), 281 NLRB 882 (1986). The issue was whether the employees’ statements on live television lost protection under the NLRA because they were “maliciously untrue” or “disloyal.” To most readers, that answer seems obvious on its face. Not to the NLRB.
As to the first part, the NLRB found that malice could not be found because it could not be shown that the statements by the employees were made with knowledge of their falsity. “The mere fact that statements are false, misleading or inaccurate is insufficient to demonstrate that they are maliciously untrue.”
With respect to the disloyalty issue, the NLRB held that “while the technicians may have been aware that some consumers might cancel the Respondents’ services after listening to the newscast, there is no evidence that they intended to inflict such harm on the Respondents’ business.” In other words, it mattered not if the employees’ knew that their statements would cost the company business, so long as there is no direct evidence that this was the employees’ intent.
The National Labor Policy
Is the MasTec Decision Consistent with National Labor Policy?
There is ample NLRB precedent for the proposition that employee conduct, even if intended to initiate or support concerted activity, is not always protected by the NLRA. The means used by the employees have been held determinative on the issue of whether to extend the Act’s protection or not.
Thus, in Canyon Ranch Inc., 321 NLRB 937 (1996), the NLRB refused to give the Act's protection to employee conduct that involved breaching the privacy of communications between management officials. Even though the employee had breached said privacy in order to distribute the information to other employees, and therefore initiate concerted conduct, the NLRB declined to “elevate [the employee’s] breach of that privacy to the realm of Section 7 protection.”
Similarly, in Uniform Rental Services, 161 NLRB 187 (1966), the Board declined to reinstate an employee who had entered a manager's private office and pilfered a letter concerning the union from the manager's desk, even though the employee had broadcast its contents to other employees in an effort to promote concerted action. Again, in NLRB v. Brookshire Grocery Co., 919 F.2d 359, 363 (5th Cir. 1990), the Fifth Circuit reaffirmed the proposition that wrongfully obtaining information from company files is not protected under the Act, irrespective of the use that the employee intends to make with the information.
The rational in Canyon Ranch, Uniform Rental and Brookshire, supra is consistent with the policies and purposes of the NLRA. The Act was never intended to destroy or dilute the relationship of loyalty that must exist in the employment context. There is nothing wrong with requiring employees who decide to appeal to third parties for assistance in their disputes with their employers to do so in a manner which is not designed to harm the employer’s ability to remain in business. To hold, as the current NLRB does, that employees’ clear disloyal conduct is protected has dangerous implications for the employees’ own job security and unnecessarily dilutes the duty of loyalty which employees owe their employers.
Overly Broad Concept of NLRA Protection
Under MasTec, if employees publicly disparage an employer to untold numbers of people, causing direct harm to the employer, this is protected, so long as the statements are not malicious or “intended” to cause harm to the employer, even if such harm is easily foreseen and a near certainty to occur. This concept of “intent” is unrealistic. Extending Section 7 protection to those facts is short sighted. It harms both sides.
Making employers powerless to discipline employees who disclose internal information to third parties, knowing that such disclosure will likely result in economic harm to the employing entity, does not advance the purposes of the NLRA.
In MasTec, the NLRB ignored the concept of the duty of loyalty in the employment relationship. Its concept of what constitutes “intent” and how Section 7 rights should be applied reflects an ivory tower mentality typical of those whose experience has been limited to bureaucracy or academia.
Snell & Wilmer
Jerry Morales is a partner in the Phoenix office of Snell & Wilmer. His practice is concentrated in labor, employment and construction law. Representation in employment-related matters includes wrongful termination, employment discrimination, arbitration and other alternative dispute resolution proceedings. He has extensive experience in NLRB unfair labor practice trials, labor union elections, collective bargaining, labor law issues affecting the construction industry, the Hispanic labor force and cross border employment, wage and hour compliance, corporate policy development and administrative proceedings before state and federal regulatory agencies, including the Equal Employment Opportunity Commission, U.S. Department of labor and National Labor Relations Board.
Joseph A. Kroeger
Snell & Wilmer
Joe Kroeger is an associate in the Tucson office of Snell & Wilmer. His practice is concentrated in labor and employment. He represents employers in a variety of areas, including employment discrimination and harassment, wrongful discharge, breach of contract, misappropriation of trade secrets, non-competition/non-solicitation matters, alternative dispute resolution, arbitration agreements and a variety of other related areas.