Quicken Loans Workplace Policies Held Unlawful

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By Lawrence E. Dubé

July 29 — Quicken Loans Inc. violated federal labor law by maintaining employment policies that interfered with workers' rights to discuss labor unions and their job conditions, the U.S. Court of Appeals for the District of Columbia Circuit held ( Quicken Loans, Inc. v. NLRB, 2016 BL 245522, D.C. Cir., No. 14-1231, 7/29/16 ).

The court endorsed the National Labor Relations Board's view that an employer violates the law by merely maintaining a rule employees reasonably would view as coercive.

Writing July 29 for the court, Judge Patricia A. Millett said the NLRB properly held that “sweeping” provisions in the mortgage company's confidentiality and non-disparagement policies were unlawful.

The employer argued that the NLRB lacked evidence employees were disciplined, or that any were actually intimidated by the rules, but Millett said the board can act to block rules that might chill the exercise of employee rights in the future.

Employer Challenged NLRB Rulings

According to the decision and NLRB records, the board's general counsel issued a complaint against Quicken Loans based on an unfair labor practice charge filed by a mortgage banker who had worked in the company's Scottsdale, Ariz., office.

An NLRB administrative law judge sustained the general counsel's allegation that the company's policies violated Section 8(a)(1) of the National Labor Relations Act because they interfered with employees' rights under Section 7 of the NLRA to engage in union activity or concerted activity for their mutual aid and protection.

A three-member NLRB panel agreed with the ALJ (359 N.L.R.B. No. 141, 197 LRRM 1140 (2013)), but the board reheard the case after the U.S. Supreme Court held in NLRB v. Noel Canning, 134 S. Ct. 2550, 199 LRRM 3685 (2014), that President Barack Obama's January 2012 recess appointments to the NLRB, including two of the board members on the Quicken Loans panel, were unconstitutional.

The second NLRB panel agreed with the ALJ that the company's conduct was unlawful (361 N.L.R.B. No. 94, 201 LRRM 682 (2014)). Quicken Loans petitioned for review, but the appeals court backed the NLRB order.

Confidentiality Rule Held Unlawful

Millett said the company, which employs about 1,700 mortgage bankers to process loan applications, required employees to sign an employment agreement that had two disputed provisions.

The company's confidentiality rule prohibited employees from disclosing “personnel information” to any person “except as may be authorized by the Company in writing.” Personnel information included employee lists and rosters, as well as “personal information” about co-workers such as home and mobile phone numbers and e-mail and home addresses.

The mortgage bankers were also required to accept the employer's non-disparagement rule, which prohibited employees from acting alone or in cooperation with others to “publicly criticize, ridicule, disparage to defame the Company or its products, services, policies, directors, officers, shareholders or employees.”

Millett said the NLRB properly held that the “personnel information” restriction in the company's confidentiality rule “directly impinged upon employees' Section 7 rights.”

Court Backs ‘Objective Inquiry' and ‘Proactive Role.'

The D.C. Circuit rejected the employer's argument it had never enforced the rule in a manner that restricted NLRA-protected activity and its contention that employees didn't understand the rule as limiting their statutory rights.

Millett wrote, “The validity of a workplace rule turns not on subjective employee understandings or actual enforcement patterns, but on an objective inquiry into how a reasonable employee would understand the rule’s disputed language.”

Such an objective assessment of employer rules “serves an important prophylactic function,” the court said, because the NLRB has a “proactive role in safeguarding employees' rights.”

Disparagement Ban Unlawful Even if Not Enforced

The court said the non-disparagement rule “similarly flies in the teeth of Section 7 rights.” The company argued that there was no evidence it ever used the disputed rule to restrict employees from exercising their rights, but Millett said, “The absence of enforcement could just as readily show that employees had buckled under the Employment Agreement’s threat of enforcement.”

Finding the board properly held that employees would reasonably view the Quicken Loans rules as limits on their freedom under the NLRA, the court enforced the board's unfair labor practice decision against the company.

Judges Sri Srinivasan and Robert Leon Wilkins joined in the opinion.

William M. Jay of Goodwin Procter LLP in New York argued the case for Quicken Loans Inc. NLRB attorney Gregoire F. Sauter in Washington argued for the board.

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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