As reported in Proskauer’s Labor Relations Update blog, the NLRB issued an important opinion on December 17, 2019 relating to employer rules requiring confidentiality from employees during workplace investigations. Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019).
The Board held, in a reversal of the Obama-era Board, that employers may require strict confidentiality for the duration of workplace investigations into illegal or unethical behavior.
At first blush, a requirement of strict confidentiality during internal investigations would appear to run afoul of SEC Rule 21F-17, which prohibits any person from taking “any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement … with respect to such communications.” However, the Board clarified that “nothing in an employer’s investigative confidentiality rules may interfere with an employee’s right to file a charge or complaint with a State or Federal agency … either before an investigation begins, while it is in progress, or after it has been completed.” The opinion also noted that it might be preferable for employers to clearly state that any confidentiality restriction does not apply to communications with governmental agencies.
As we previously reported (see here, here, and here), the SEC has brought multiple enforcement actions to enforce Rule 21F-17, although there have been no such enforcement actions in the employment setting since January 2017. Notwithstanding the Board’s determination that strict confidentiality can be required during investigations, employers should ensure that their internal investigation protocols include language making clear that such a rule is not absolute and that employees are always permitted to report concerns to the SEC.