Hunton Employment & Labor Perspectives

Employers should be aware of a recent ruling by the U.S. Court of Appeals for the District of Columbia Circuit that overly broad confidentiality and nondisparagement policies violate the National Labor Relations Act (“NLRA”).  The case, Quicken Loans v. NLRB, 2016 U.S. App. LEXIS 13778 (D.C. Cir.), involved an employment policy which prohibited employees from using or disclosing a broad range of personnel information without Quicken's prior written consent or to criticize publicly the company and its management. The National Labor Relations Board (“NLRB” or “Board”) determined that those rules ran afoul of Section 7 of the NLRA because they “unreasonably burden the employees’ ability to discuss legitimate employment matters, to protest employer practices, and to organize.” Quicken then appealed the NLRB’s decision to the D.C. Circuit Court of Appeals.

On April 1, 2015, the US Securities and Exchange Commission brought its first enforcement action against a company for asking employees to agree to confidentiality terms during internal investigations.

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Jurisdiction

Jurisdiction may be the most important factor organizations should take into consideration when offshoring.  Some countries do not recognize certain U.S. legal doctrines, such as confidentiality agreements, and without proper jurisdiction an organization may be unable to enforce its contract with a vendor.

When selecting an offshore country, organizations should consider whether the country permits a choice of law provision which would allow courts to apply U.S. law.  If the country permits choice of law provisions, the provision should be well defined in the contract so that there is no ambiguity.  Organizations should also consider working with counsel in the offshore country to assist with legal intricacies, even if a United States choice of law provision is permissible.