Tag Archive for: nondisclosure

NLRB General Counsel issues Memo attempting to clarify Board decision regarding confidentiality clauses in severance agreements

The NLRB General Counsel issued Memorandum GC 23-05 attempting to clarify the Board’s recent decision in McLaren Macomb regarding confidentiality clauses in severance agreements.

The NLRB General Counsel’s Memo can be summarized as making the following broad points:

  • Severance agreements are not prohibited in general.
  • Severance agreements with confidentiality clauses that are narrowly tailored to protect “proprietary or trade secrets information” are enforceable.
  • The NLRB General Counsel’s office will pursue charges against employers who merely offer a severance agreement with confidentiality language that her office believes violates section 7 of the NLRA, whether or not the individual signed it.
  • The NLRB General Counsel’s office will pursue charges against employers involving severance agreements predating McLaren Macomb, in other words, her office will view the Board’s decision as retroactive.
    • Although the Memo did not address the statute of limitations, it is noted that NLRA violations generally carry a 6-month statute of limitations.
  • Because Section 7 of the NLRA protects both unionized and non-unionized employees, the NLRB General Counsel’s office will pursue charges against employers it believes have violated McLaren Macomb even where no union or actual union-organizing activity is involved.
  • When the NLRB General Counsel’s office chooses to prosecute an employer for what it believes is a McLaren Macomb violation, the Memo states her office will seek only to strike the violative language, not the release itself or other portions of the severance agreement.

Unfortunately the NLRB General Counsel’s Memo raises additional questions and fails to answer many questions raised by the Board’s ruling in McLaren Macomb, including at least and without limitation the following:

  • The NLRB General Counsel’s Memo suggests her office may take a dim view of severance agreements that attempt to waive employment claims, not just claims under the NLRA. Likewise, it suggests that her office may look restrictively at releases as to claims arising after the date of the severance agreement.
  • The NLRB General Counsel’s Memo failed to provide any kind of sample language for what her office will accept as permissible confidentiality language in a severance agreement.
  • The NLRB General Counsel’s Memo states that a savings clause “may be helpful” but failed to explain further what kind of savings/disclaimer language would be helpful or to what extent it might help. For example, since the Memo states her office will seek only to strike language to the extent violative of section 7 of the NLRA, it seems unlikely that any enforcement action would be appropriate for her office if an employer, confronted by an individual asserting a section 7 issue or even filing an NLRB charge, were to review its severance agreement (or even proffered but unsigned severance agreement) then note the presence of savings language and agree that nothing in the draft would be used in violation of section 7, especially where the employer then agrees to amend or even revise language.
  • The NLRB General Counsel’s Memo said that it would review but failed to explain when or even if other clauses besides confidentiality provisions can be violative of McLaren Macomb. Such other clauses might include non-disparagement provisions, non-compete clauses, non-solicit clauses, no-poaching clauses, even broad general release clauses and covenants not to sue. For example the NLRB General Counsel’s Memo suggested, without explaining, that her office might view at least some cooperation clauses as running afoul of section 7.
    • It appears that even under this new restrictive approach confidentiality provisions that provide that the terms of the severance agreement, including the amount of severance, are permissible. It so appears because in her Memo, the NLRB General Counsel stated that NLRB OM Memo OC 07-27 remains in effect (“Yes. OM 07-27 is consistent with the McLaren Macomb decision.”), which in turn so provided (see its section 3).
  • The NLRB General Counsel’s Memo failed to explain how it will view confidentiality and related clauses when requested by the individual, especially in states with so-called Me-Too laws that provide for the enforceability of such provisions when requested by the individual.
  • The NLRB General Counsel’s Memo notes that supervisors are generally not protected by the NLRA but hypothesized that a supervisor might somehow become protected if they refused to extend a draft severance agreement that the supervisor believed was violative of McLaren Macomb.

The Board’s decision in McLaren Macomb is likely to be appealed and subjected to further litigaiton, as is the NLRB General Counsel’s Memo.

NLRB holds that separation agreements containing broad nondisclosure, nondisparagement or confidentiality language may violate Section 7 of the NLRA

Overruling Trump-era Board precedent, the NLRB, in McLaren Macomb, held that separation agreements containing broad nondisclosure, nondisparagement or confidentiality language may violate Section 7 of the NLRA, which protects both unionized and non-unionized workers (and which the Board is increasingly viewing as protecting non-employee contractors as well). The Board will now review such language to determine if, on its face (and apparently possibly without need of an actual witness to so testify), the language might provide a chilling effect on a (again potentially purely hypothetical) individual’s ability to discuss their wages, hours or working conditions with other workers, the NLRB or even the public in general. The Board did not provide guidance on how it will review such language or what specific language it might approve, but it seems it will be a narrower view than Republic-appointed Boards might utilize.

The main disagreement between the current Biden-era Board and the prior Trump-era Board appears to be — in addition to the strictness of their language review — their inability to agree on whether a separation agreement (also known as a severance agreement) is by its nature something that relates to wages, hours or working conditions of employment. The Trump-era Board (and the dissenter in this McLaren Macomb decision) viewed severance as, by its nature, being inherently not related to the wages, hours or working conditions of employment.

The issue is likely to proceed to litigation in the courts. However, McLaren Macomb sets forth at least the general approach that the current NLRB will take when reviewing separation agreements.

Congress enacts limitations on non-disclosure and non-disparagement agreements regarding sexual harassment and sexual assault

President Biden signed into effect the Speak Out Act, which prohibits judicial enforcement at least in federal and tribal courts of non-disclosure or non-disparagement clauses when sought to be enforced relative to a matter involving sexual assault or sexual harassment, so long as the clause is in an agreement entered into on or after 12/7/2022. The Act’s prohibition includes a prohibition against enforcement of such provisions relative to the existence or terms of a settlement involving sexual assault or sexual harassment, as well against judicial actions, at least in federal and tribal courts, involving negative statements about another party related to such an agreement, sexual harassment or sexual assault.

The Act’s applicability in state courts is not clear from its language and likely to draw litigation.

Colorado passes new law severely limiting restrictive employment agreements, including non-competes, non-solicits and even some non-disclosures

Colorado passed HB 22-1317, which severely limits restrictive employment agreements, including non-competes, non-solicits and even some non-disclosures. HB 22-1317 is currently before the Governor where it is expected to become law without veto.

HB 22-1317 applies only to agreements containing such provisions if entered into on or after 8/10/2022; however, the Act contemplates the possibility that a referendum petition will be filed by voters to contest it, in which case HB 22-1317 provides it will be held in abeyance without any part taking effect until after the November 2022 state election. Absent a successful challenge by referendum in this fall’s vote, HB 22-1317 will entirely restructure Colorado’s longstanding law in this area, CRS 8-2-113.

First, like existing Colorado law, HB 22-1317 renders void all non-competes unless they fall into certain defined exceptions. However, unlike existing Colorado law, HB 22-1317 significantly limits the available exceptions to only the following three categories:

  1. Covenants associated with the sale of a business, which can include sales arranged as so-called asset deals.
  2. Covenants that (a) are no broader than what is reasonably necessary to protect trade secrets (b) so long as the individual earns enough to qualify as a “highly compensated worker,” a legally defined phrase with a minimum earning level set by the CDLE, currently at $101,250 per year. Note: HB 22-1317 does not permit such covenants for the protection of mere confidential information; the information must instead rise to the level of a “trade secret” as otherwise defined in and protected by Colorado law.
  3. Mere non-solicits for customers (not non-competes) if the worker earns at least 60% of the “highly compensated worker” amount (currently $101,250×60%=$60,750 per year).

Note: Under HB 22-1317 there is no longer an exception permitting non-competes for “executive and management personnel and officers and employees who constitute professional staff to executive and management personnel.”

Second, each of those three exceptions are available only after a new written notice is provided. HB 22-1317 will require that written notice be provided (a) to prospective workers before the worker accepts the offer of employment and (b) to current workers at least 14 days before the covenant will be effective or additional compensation is provided or a change in the employee’s terms or conditions of employment occurs as consideration for the covenants, whichever is earlier. The written notice must be provided in a document separate from whatever document contains the covenants. It must be written in “clear and conspicuous terms in the language in which the worker and employer communicate about the worker’s performance.” It must be signed by the worker. Copies must be made available upon request by the worker once per year. The notice must either provide a copy of the agreement containing the covenant or identify that agreement “by name and state() that the agreement contains a covenant not to compete that could restrict the workers’ options for subsequent employment following their separation from the employer.” The notice must “direct() the worker to the specific sections or paragraphs of the agreement that contain the covenant not to compete.”

HB 22-1317 makes additional revisions to an employer’s ability to impose covenant-like restrictions in the event the employer provides employer-paid training (which does not generally include “normal, on-the-job” training) and in situations involving physicians.

Next, HB 22-1317 prohibits non-disclosure agreements (confidentiality agreements) to the extent they seek to protect “general training, knowledge, skill or experience whether gained on the job or otherwise.” Nor can such an agreement apply to “information that is readily ascertainable to the public, or information that a worker otherwise has a right to disclose as legally protected conduct.”

It is not clear from HB 22-1317 if its written notice requirements apply to non-disclosure agreements (confidentiality agreements). It appears on its face as drafted that HB 22-1317 only requires such written notice for covenants not to compete, which may include non-solicits (to the extent within the above three exceptions) and not for a non-disclosure agreement (confidentiality agreement) that contains no non-compete and no non-solicit.

HB 22-1317 also prohibits contrary choice of law and choice of forum provisions; if a worker resides primarily in or works in Colorado, at the time of termination, Colorado law will apply, and the worker may not be required to litigate outside of Colorado.

HB 22-1317 imposes new penalties and permits the Colorado Attorney General to take action directly against a violating employer. Both employees and the Colorado Attorney General can bring a declaratory action to invalidate violative covenants.

Employers should review all agreements containing covenants in Colorado. This includes not only formal non-compete/non-solicit agreements, but also confidentiality (non-disclosure, aka proprietary information agreements). This includes all agreements such clauses, for example, any equity incentive agreements, restrictive stock grants, stock option awards, etc. Employers are reminded to review not only for going-forward compliance in terms of such covenants but also their choice of law and choice of forum provisions.

CDLE revises INFO no. 9 regarding Colorado Equal Pay law’s posting requirements

Following up on its recent informal email announcement, the CDLE has revised its Interpretive Notice and Formal Opinion (INFO) no. 9 interpreting Colorado’s Equal Pay for Equal Work Act’s posting requirements. Because the CDLE does not go through formal rulemaking when it issues INFOs, they do not carry the weight of law; however, they the CDLE’s opinion of how the law should be interpreted and reflect how the CDLE intends to interpret the law when called upon to apply it.

In these revisions, the CDLE confirmed its prior statement that covered employers may not evade the law by simply posting disclaimers in a job posting to the effect that Coloradans are ineligible. The CDLE confirmed here its position that these posting requirements do generally apply whenever Coloradans can access a posting, the work can be performed in Colorado (even if remotely into another state) and certainly when it can only be performed in Colorado. Key new language has been included in the following passages from INFO no. 9:

Covered job postings include any posting by a covered employer for either (1) work tied to Colorado locations or (2) remote work performable anywhere, but not (3) work performable only at non-Colorado worksites — as discussed below, under the header, “Out-of-State Jobs Are Excluded.”

Out-of-State Jobs Are Excluded. Employers need not disclose compensation for jobs to be performed entirely outside Colorado (which includes non-Colorado jobs that may include modest travel to Colorado), even if the job posting is in, or reaches, Colorado. Because the text of the Act excludes no jobs, the out-of-state exception is a merely implied one that must be applied narrowly, only where an out-of-state worksite makes Colorado law arguably inapplicable. The out-of-state exception therefore applies to only jobs tied to non-Colorado worksites (e.g. waitstaff at restaurant locations in other states), but not to remote work performable in Colorado or elsewhere. Thus, a remote job posting, even if it states that the employer will not accept Colorado applicants, remains covered by the Act’s transparency requirements: the Act expressly covers all jobs, so a Colorado-covered employer’s posting of work performable anywhere is not within the narrow implied exception for out-of-state worksites to which Colorado law is arguably inapplicable.

Out-of-State Postings Are Excluded. Employers need not disclose compensation in job postings made entirely outside Colorado. For example, compensation and benefits need not be included in a printed advertisement or posting entirely in another state, but must be included in an online posting accessible by Colorado residents.

The CDLE added language confirming this is true for promotional opportunities as well:

As with job postings generally — see the above section, “Out-of-State Jobs Are Excluded,” as to the scope of the out-of-state exemption applicable here as well — remote jobs do not qualify for this exclusion; promotional opportunity notices for such jobs must include compensation and benefits.

Regarding promotional opportunities, INFO no. 9 continues to require that, if not actually provided to employees, the posting — such as on an intranet site — “must be posted for long enough that employees can reasonably access it.” The CDLE does not give further guidance on how long that would be.

Unfortunately some of the new language is likely to increase not decrease confusion about this new law. Consider for example this sentence (emphasis added), which apparently was meant to confirm that a simple Help Wanted sign is not a “posting” and need not contain information about compensation, benefits, etc.

A “posting” is any written or printed communication (whether electronic or hard copy) that the employer has a specific job or jobs available or is accepting job applications for a particular position or positions, but not a “Help Wanted” sign or similar communication indicating only generally, without reference to any particular positions, that an employer is accepting applications or hiring.

Did the EEOC really intend to require that a small family-owned restaurant who hangs a “Cooks Wanted” sign in the window has to print the salary range, benefits, etc., on the sign?  Consider a sign at a larger company saying “Drivers Wanted”; how could such a sign even contain all the information that is encompassed in a driver’s position?

Supreme Court rules CFAA is not available in most employment lawsuits involving trade secrets, NDA’s, non-competes and non-solicits

Resolving a long-running split among the lower courts, the Supreme Court has, unfortunately for employers, held that the CFAA (Computer Fraud and Abuse Act) is not available in most lawsuits against current and former employees involving trade secrets, NDA’s, non-competes and non-solicits. The CFAA is a powerful federal law that allows enhanced remedies for companies who are the victim of someone using their computers “without authorization.” It has, in many jurisdictions, been the frequent basis for lawsuits against current and former employees who use computers and the data on computers, such as customer lists, pricing information and other trade secrets or confidential information, to compete against their employers.

Many jurisdictions had held that, as soon as an employee undertakes a disloyal act — such as violating an NDA, non-compete, or common law breach of loyalty — any subsequent use, including access, of their employer’s computers, including data on those computers, is “without authorization.”

The Supreme Court rejected that position and held, instead, that the CFAA only “covers those who obtain information from particular areas in the computer — such as files, folders, or databases — to which their computer access does not extend. It does not cover those who … have improper motives for obtaining information that is otherwise available to them.”

Why would the Supreme Court strip employers of such a valuable tool for protecting their confidential information? Remember the CFAA was only used in such situations when — and because — the employee violated the company’s rights. The majority was concerned that the CFAA also includes criminal penalties. Indeed the case arose as a criminal prosecution. The majority reasoned that permitting the CFAA to cover those whose use was unlawful due to an “improper motive” would result in a “breathtaking” number of criminal cases. A 3-justice dissent disagreed, but until and unless Congress amends the CFAA, the Supreme Court’s decision has stripped employers of a previously valuable tool.

Employers (and employees) involved in or anticipating lawsuits that include CFAA claims should immediately review the Supreme Court’s decision and its impact on their litigation.

Source: Van Buren v. U.S., case no. 19-783 (6/3/2021).

Third Circuit rules at least part of an asset-purchase agreement must be disclosed to union if requested

The Third Circuit recently held in Crozer-Chester Medical Center v. NLRB that at least portions of an asset-purchase agreement must be disclosed to a union representing workers in the seller’s workforce upon request. The seller had announced its intent to be acquired through an asset purchase and, in doing so, advised that workers in the union’s bargaining unit would be offered employment by the buyer subject to the terms and conditions of a new collective bargaining agreement that the buyer intended to negotiate with their union. The union requested a complete unredacted copy of the asset-purchase agreement (APA). The seller objected that the request was overly broad. The NLRB ruled against the seller, finding that at least some parts were clearly relevant and that it was, therefore, incumbent on the seller to produce the entire agreement or negotiate with the union an agreement to produce only parts. The NLRB found that provisions involving “’employees,’ terms and conditions of employment, the name of the hospitals, the continuation or expansion of certain service lines, capital investments, standards of care, equipment and property,” because those terms, at least, were “relevant to the availability and location of unit work, the potential for layoffs and hiring, whether the pension plan would be fully funded, and whether non-unit employees were receiving pay or benefits the Union might want to negotiate.”

The company then argued that disclosure of the APA would violate its confidentiality provisions and the nondisclosure obligations it owed the buyer. The Third Circuit rejected this argument as well, holding that a seller cannot immunize itself against disclosure to a union by negotiating confidentiality with the buyer.

Colorado trial courts are not required to blue-pencil non-compete and non-solicit covenants

Even where an agreement says that covenants “shall be” blue-penciled (meaning, rewritten if determined to be unenforceable and narrowed to whatever the court rules would have been enforceable), a trial court in Colorado is not required to do so. In a recent decision, 23 LTD v. Herman, case no. 16CA1095 (Colo.App. 7/25/19), the Colorado Court of Appeals confirmed blue penciling is within a trial court judge’s discretion. The parties cannot, by way of mandatory language like “shall,” not only confer on the judge the authority to re-write their agreement but an obligation to do so.

Simply put, the court is not a party to the agreement, and the parties have no power or authority to enlist the court as their agent. Thus, parties to an employment or noncompete agreement cannot contractually obligate a court to blue pencil noncompete provisions that it determines are unreasonable.

The case is a strong reminder for employers not to over-reach when drafting covenants, non-competes or non-solicits. While a blue penciling clause may give the judge to make some changes like reducing the geographic or temporal reach of the covenant (how many miles/how many months), the parties should not expect a judge will be willing to make changes beyond that, or even of that nature. Whether to blue pencil at all is an issue for each judge.

Fundamentally, it is the obligation of a party who has, and wishes to protect, trade secrets to craft contractual provisions that do so without violating the important public policies of this state.[5] That responsibility does not fall on the shoulders of judges

Employers don’t face either-or decision when recovering for civil theft

A recent Colorado Supreme Court decision addressed what is known as the Economic Loss rule. Under the Economic Loss rule, a victim of wrongdoing who has a contract claim for the same wrongdoing is limited to recovering only the economic losses for breach of the contract.

In this case, an employee expected to be involved in a lawsuit with his employer. In order to prepare himself for the lawsuit, he emailed himself thousands of company emails to use as evidence. The problem was, the employer contends, that violated his employment agreement and constituted, among other things, theft from the company. When he eventually sued the company, the company counterclaimed for breach of the employment agreement, civil theft, and other claims. The employee cited the economic loss rule, saying that if what he did was wrong, then it constituted a violation of his employment agreement, and as such, his former employer was entitled to recover only the economic losses flowing from the breach of his employment agreement … not any of the other remedies available under its other claims, including statutory penalties and attorney fees.

The Colorado Supreme Court rejected the employee’s argument and held that the economic loss rule did not prohibit recovery especially under the Colorado civil theft statute. As the Court explained, the legislature had created the civil theft statute in order to impose enhanced penalties, which “strongly suggests that the section was intended to serve primarily a punitive, rather than a remedial purpose. ”

The case is a strong reminder to employees who are considering violating their employer’s rights by emailing themselves information. Employees cannot take it upon themselves to stockpile evidence in anticipated litigation. Likewise, the case is a reminder for employers who become the victims of such misconduct that they have strong legal rights of their own.

Source: Bermel v. BlueRadios, Inc., case no. 17SC246 (5/6/19).

New Jersey Adds And Expands On State Laws Banning Non-Disclosure Provisions

Following up on developments in California and New York, as well as under the federal tax code, New Jersey has banned nondisclosure provisions, a/k/a confidentiality provisions, in agreements, including employment agreements and settlement agreements, that would prohibit disclosure of allegations related not only to sexual harassment but also discrimination, retaliation and other forms of prohibited harassment.

Source: New Jersey Senate Bill S121.

California courts strike non-solicits

Two recent California decisions warrant immediate review by companies that might seek to enforce non-solicitation covenants. The two courts each struck covenants that prohibited former employees from soliciting the company’s employees. The first decision was announced by the California Court of Appeals, which summarized its analysis of the non-solicit at-issue, as follows:

Turning to the instant case, we independently conclude that the nonsolicitation of employee provision in the CNDA is void under section 16600. Indeed, the broadly worded provision prevents individual defendants, for a period of at least one year after termination of employment with AMN, from either “directly or indirectly” soliciting or recruiting, or causing others to solicit or induce, any employee of AMN. This provision clearly restrained individual defendants from practicing with Aya their chosen profession — recruiting travel nurses on 13-week assignments with AMN. (See Dowell, supra, 179 Cal.App.4th at p. 575 [finding a broadly worded nonsolicitation clause preventing employees from rendering any service to “any of the accounts, customers or clients with whom they had contact during their last 12 months of employment” void under section 16600]; D’Sa, supra, 85 Cal.App.4th at p. 930 [finding a provision in an employee confidentiality agreement was void under section 16600 because it prevented an employee from rendering “`services, directly or indirectly, for a period of one year after separation of employment with [employer] to any person or entity in connection with any [c]ompeting [p]roduct'”]; Metro Traffic Control, Inc. v. Shadow Traffic Network (1994) 22 Cal.App.4th 853, 859 (Metro Traffic) [finding a broadly worded noncompetition provision void under section 16600 because it prevented an employee from working for a competitor for a period of one year after termination from the employer].)

As that quote suggests, the Court of Appeals noted that the non-solicit acted, for these individuals, who were recruiters, like a non-compete. If they could not solicit the company’s employees, the Court of Appeals reasoned, they could not compete, since recruiting was their business.

Would this analysis apply even where the individual was not a recruiter? It isn’t clear, but the second recent court decision suggests it might.

Employers should have their proprietary information agreements (and any other agreement containing covenants) reviewed by legal counsel, especially if California law may be implicated.

Source: AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., case no. No. D071924 (Cal.App. 11/1/18); Barker v. Insight Global, LLC, case no. 16-cv-07186-BLF (N.D.Cal. 1/11/19).

Massachusetts non-compete law

Massachusetts has adopted what may be the country’s singlemost employee-side non-compete law. That law, among other things, mandates at least 1/2-year’s garden leave, in other words, at least 1/2 of an employee’s average salary (with the formula to calculate specified in the statute). Timing requirements are imposed regarding the process by which covenants can be entered into with an employee. Additional constraints exist on the duration and geographic scope of permitted non-competes. The law applies to non-competes entered into on or after 10/1/18. It does not apply to a number of other types of covenants, including non-solicits of employees, non-solicits of customers, non-competes entered into for the sale of a business and non-competes entered into outside of employment. Employers with non-competes in Massachusetts are advised to immediately begin analyzing their agreements.

Source: Massachusetts’ 2018 act entitled, “An act relative to the judicial enforcement of noncompetition agreements”

Board steers a sharp 180 in the application of Section 7 to handbooks and policies

During President Obama’s administration, the NLRB substantially expanded its scrutiny of handbooks, workplace rules and workplace policies that, it felt, conflicted with Section 7 of the National Labor Relations Act. Section 7 is the part of the Act that permits both unionized and non-unionized workers to act together in concert to further their wages, hours and working conditions.

On June 6, 2018, NLRB General Counsel Peter B. Robb announced the Board will no longer lean towards finding violations of Section 7 in workplace policies. The General Counsel’s memo implements the Board’s own decision in The Boeing Company, 365 NLRB No. 154 (Dec. 14, 2017), where it reversed much of the doctrines associated with the Obama-era Board’s Section 7 analysis and the General Counsel’s previous memo in December 2017.

Now the Board is directed to no longer err on the side of finding a violation when it determines language is merely on its face, without evidence of actual anti-union animus, potentially ambiguous.

Regions should now note that ambiguities in rules are no longer interpreted against the drafter, and generalized provisions should not be interpreted as banning all activity that could conceivably be included.

NLRB General Counsel advised Board personnel that, now, the following types of policies should be considered presumptively lawful:

  • Civility codes (for example, policies that prohibit language or behavior that is offensive, rude, discourteous, negative, annoying, disparaging, condescending, etc.)
  • Rules that prohibit photography/recording in the workplace
  • Rules that prohibit insubordination or non-cooperation
  • Rules that prohibit disruptive or boisterous conduct
  • Rules that protect confidential, proprietary or customer information
  • Rules that prohibit defamation or misrepresentation
  • Rules that protect company logos and I.P.
  • Rules that prohibit speaking on behalf of the company without authorization
  • Rules that prohibit disloyalty, nepotism or self-enrichment

NLRB General Counsel advised Board personnel that, now, the following types of policies will no longer be considered presumptively unlawful, but rather will now require individualized analysis of the particular circumstances of each case:

  • Rules that prohibit conflicts of interest “that do not specifically target fraud and self-enrichment”
  • Broad confidentiality rules that merely protect “employer business” or “employer information”
  • Anti-disparagement rules that prohibit criticizing the company only
  • Rules that broadly prohibit the use of a company’s name
  • Rules that restrict workers’ ability to speak to media or third-parties on their own behalf
  • Rules that prohibit lawful off-duty conduct that is otherwise protected
  • Rules that broadly prohibit making any kind of “false or inaccurate statements”

Finally, NLRB General Counsel identified the following as rules that remain presumptively unlawful:

  • Rules that prohibit employees from discussing their wages, hours and working conditions
  • Rules that prohibit employees from disclosing their own wages, hours and working conditions to the media
  • Rules that prohibit employees from joining “outside organizations”

NLRB General Counsel also cautioned that the Board’s historical (pre-Obama era) approach to the following types of policies remains unchanged:

  • Solicitation/distribution policies
  • Workplace access policies
  • Uniform policies (to include rules re buttons, tshirts, etc.)

Source: NLRB General Counsel Memorandum GC 18-04 (6/6/18).

NLRB General Counsel issues memo outlining likely reversals to Obama-era precedents

As previously reported here in this blog, the Trump Board (NLRB Boards are often colloquially but not pejoratively referred to by the President during their term) has begun overruling Obama-era precedents. Further reversals are anticipated. Curious which Obama-era NLRB precedents are likely to be reversed?

NLRB General Counsel Robb issued a controversial memo, shortlisting the cases he thinks most warrant attention. Indeed to call it a shortlist is a stretch. The General Counsel lists 26 categories, that range from employee access to email, to protections for section 7 rights, obscene and harassing behavior, off-duty access to property, the Weingarten right to have a representative present, rights of employees during contract negotiations, successorship and of course the joint employer doctrine, unilateral changes consistent with past practice, information requests during the processing of a grievance, dues check-offs, remedies, deferral, and, well, the list goes on, as will employers’ need to stay tuned to forthcoming developments at the Board.

Source: NLRB General Counsel Memorandum GC 18-02.

Tenth Circuit reaffirms need for irreparable harm to obtain injunction in trade secrets case

Both federal and state law (respectively, the Defend Trade Secrets Act (DTSA) and Colorado’s Uniform Trade Secrets Act (CUTSA)) authorize a company to obtain a preliminary injunction against a former employee who is using or threatening to use its trade secrets. The Tenth Circuit recently reaffirmed that, among the requirements for such an injunction, is proof of irreparable harm. (The other requirements are (1) substantial likelihood of success once the merits of the case are decided, (2) the threatened injury outweighs the harm of the injunction, and (3) the injunction will not be adverse to the public interest.)

To be “irreparable” the harm that will be suffered but for the preliminary injunction must be the kind that cannot be reversed, repaired or even compensated for in damages.

In this case, the trial court found that the harm the former employer would suffer if no injunction was issued could be compensated for in damages. In other words, quoting the trial court, it could be “reasonably quantified” in terms of dollars, and such an award of damages “would have adequately made (the company) whole.” Typically that is enough to show such harm is not “irreparable” and therefore a preliminary injunction should be denied.

However, the trial court decided that no showing of actual harm was necessary to prove the irreparable harm element; it decided that the element of irreparable harm could instead be presumed. The court so decided “because both the DTSA … and the CUTSA … provide for injunctive relief.”

The Tenth Circuit reversed. The Tenth Circuit held that legislatures can create presumptions of irreparable harm but to do so they need to say so. Both DTSA and CUTSA lack such language. They merely allow for injunctive relief:

DTSA and CUTSA … merely authorize and do not mandate injunctive relief and thus do not allow a presumption of irreparable harm.

Without a presumption of irreparable harm and lacking proof of irreparable harm, the Tenth Circuit reversed.

The case illustrates the need to prove irreparable harm, in order to obtain a preliminary injunction in cases involving trade secrets. The case is also a reminder that irreparable harm cannot exist where monetary damages will make the plaintiff whole.

Source: FIRST WESTERN CAPITAL MANAGEMENT COMPANY v. MALAMED, Court of Appeals, 10th Circuit 2017 – Google Scholar

$1.3-million verdict overturned, where design was held to be publicly known, despite efforts to keep it confidential as a trade secret

Although publicly known information can be combined in proprietary ways that create a trade secret, the Colorado Court of Appeals held that a design that is not “a secret in the first place,” in other words, that is a matter “of public knowledge or of general knowledge in an industry” is not, itself, a trade secret, no matter how hard its owner works to keep it confidential, the design does not become a trade secret.

Lacking protection as a trade secret, the Court of Appeals reversed a jury’s $1.3-million verdict in this case for misappropriate in violation of Colorado’s trade secret laws.

The decision is a sharp reminder of the limitations imposed by Colorado law on companies seeking to claim trade secrets. The determination whether information constitutes a trade secret is often crucial in non-compete and non-solicit cases.

The case was Hawg Tools, LLC v. Newsco international Energy Services, Inc. — P.3d — (Colo.App. 2016).