In a recent decision issued on March 21, 2019, an administrative law judge (ALJ) held that confidentiality clauses in arbitration agreements violate the National Labor Relations Act (the Act). Specifically, the ALJ held that such provisions run afoul of section 8(a)(1) of the Act, and unlawfully require a waiver of employees’ rights under section 7 of the Act to discuss and publicly disclose their terms and conditions of employment. Many may view rulings like this as yet another attack on otherwise lawful arbitration agreements.
In the matter before the ALJ, an employer had lawfully required its employees to enter into an arbitration agreement as a condition of continued employment. The arbitration agreement included a confidentiality clause. The confidentiality clause provided, in part: “The parties shall maintain the confidential nature of the arbitration proceeding and the award, including all disclosures in discovery, submissions to the arbitrator, the hearing, and the contents of the arbitrator’s award[.]”
Although the confidentiality clause, as written, appeared to impose a duty of secrecy rather than a prohibition on disclosure, the ALJ instructed that employees would nonetheless reasonably understand the clause’s message to be one prohibiting them from discussing or disclosing information pertaining to the arbitration or arbitral award. Further still, the clause would reasonably cause employees to believe that they could be disciplined if they were to disclose the information.