QuestionHow do we handle firing an individual in the HR/Accounting Department who has shared information with more than one employee regarding payroll rates, bonuses, etc.? She has also had personal relationships with at least two male employees. We intend to fire this individual, but I need to know legal process. Should we request that she sign a document promising to not share any personal information that she was privy to while in her position?
ResponseIf the employment relationship is at will, and it is consistent with employer policy and practice to terminate employment based on the behavior you describe, we are not aware of any law prohibiting the employer from seeking to discharge an employee on these grounds.
You indicate that the subject employee works in HR/Accounting and presumably has access to employee compensation data, and that she improperly shared this information with more than one employee who did not have a legitimate need to know it. It seems she has also had "personal relationships with at least two male employees" although it is not clear from the inquiry whether these relationships were in violation of any company policy and/or adversely affected the workplace. If not, we do not recommend making this behavior part of any disciplinary or discharge discussion.
That said, if the employee's actions in revealing confidential employee compensation data to others in the workplace who did not have a legitimate need to know it is grounds for dismissal, then we are not aware of any federal or state employment law which would prohibit the employer from proceeding. Indeed in an at-will employment setting, employers have discretion to determine what constitutes ground for discharge, and certainly exploiting one's access to confidential employee compensation data and divulging it to others in the organization who do not have a legitimate need to know it can be ground for disciplinary action, up to and including discharge. If termination of employment is consistent with policy and past practice (if any), as noted, the employer may proceed.
If, however, the employer determines to retain the subject employee in employment, it can do so, though should consider issuing lesser disciplinary action (perhaps a written or final warning) that makes clear to the employee the infraction, what is expected of her moving forward, and what the consequences will be if she fails to adhere to the policy in the future. In this scenario the employer can certainly include a policy statement reiterating its confidentiality policy and requiring the employee to sign a statement acknowledging her receipt, understanding and agreement to comply with the policy in the future (if the employment relationship is terminated, there is no need to have her sign any "document promising to not share any personal information that she was privy to while in her position" -- such statement would be moot if she is let go). The employer will also need to take measures to ensure that private employee data is protected and not subject to improper disclosure.
Ultimately, if the employment relationship is at will and it is not inconsistent with company policy and past practice to terminate employment based on the employee's failure to maintain confidentiality as to private compensation data to which she had access, we see no reason for the employer not to proceed with disciplinary action, including terminating employment -- indeed it may be difficult to trust the employee to maintain confidentiality moving forward. Employers are not required to retain at-will employees in whom they have lost trust, and particularly if the employee had been previously on notice that compensation data was confidential and not to be disclosed to anyone in the organization who did not have a legitimate need to know it.
In some cases, it makes sense for an employer to bring disciplinary matters to an employee's attention, and offer a chance to improve, before arriving at a discharge decision, but in other cases the infraction is so severe that immediate discharge is warranted. Here, as noted, the employee's failure to maintain confidentiality may have broken the employer's faith in the employee, and if the employer is not confident that she can be trusted not to divulge similar information in the future, as noted the employer is not obligated to retain her in employment if she is employed at will (and assuming any other employees who may have committed similar violations were not retained, either).
The best practice is to be candid with an employee who is being let go as to the employer's decision to terminate the employment relationship. In this regard, for example, if the employer is not eliminating the employee's position, that is not what the employee should be told is the reason for ending employment with her. Further, offering no reason or a vague one or, worse, a false reason for why the employer has decided to discharge an employee is also ill-advised. Indeed if the discharge decision is later challenged and the employer defends such a challenge with a reason for discharge that was never communicated to the employee at the time of separation, there can be significant impairment to the employer's credibility, and this can jeopardize the employer's chances for succeeding in its defense of the claim. Ultimately, the employer should have a legitimate, non-discriminatory, non-retaliatory justification for seeking to end the employment relationship, which should be consistent with policy and past practice (if any) and not in violation of any contract. When it does, there is no reason not to tell the employee candidly what it is.
Finally, we wish to mention that in some cases, compensation discussions among employees are protected under the federal National Labor Relations Act (NLRA), which applies to both unionized and non-unionized employers alike. Indeed, among other things, the Act prevents an employer from interfering with, restraining, or coercing employees in exercising their statutory rights. It specifically protects the right of employees to discuss their wages, hours, and other terms and conditions of employment with one another for their mutual aid or protection. Several years ago, the National Labor Relations Board (NLRB) expanded the potential arena for these violations in a case holding that even a broadly-stated generic corporate confidentiality policy (as opposed to a more narrow policy prohibiting only salary discussions, which as noted is not permitted) also violated the Act because it "could reasonably be construed" to prohibit employees from discussing their wages or other terms and conditions of their employment, which they are entitled by law to be able to do. This case was subsequently affirmed by the federal Circuit Court of Appeals that reviewed it a few years later.
Accordingly, any employer mandate or rule prohibiting or even discouraging employees from discussing THEIR OWN wages (or other terms and conditions of their employment) with co-workers -- and any policy or practice that seeks to take adverse action against employees who do so -- creates exposure to the employer for a violation of Section 8(a)(1) of the NLRA, and is not advised.
Note though, that managerial and other employees who are aware of or come into possession of compensation data for their subordinates or other employees in the organization in the ordinary course of business -- as you describe occurred with the HR/Accounting Department employee in question -- do not have the right to disclose that data to others in the company who do not have a legitimate need to know what it is. For more information, please see https://www.nlrb.gov/rights-we-protect/whats-law/employers/interfering-employee-rights-section-7-8a1 (the full text of the Act, should you wish to review it, can be found at https://www.nlrb.gov/resources/national-labor-relations-act).
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