Bridgewater Settlement Spotlights Employers’ Heavy Handed Use of Employment Contract Provisions

January 28, 2017

for many workers, signing an employment contract with a confidentiality, non-disclosure, non-competition, or non-solicitation clause is a necessary part of accepting and keeping a job. What they don’t anticipate, however, is that those provisions can be leveraged against them to restrict employees’ rights to challenge unlawful practices and find other work, placing their livelihoods and future employment in jeopardy.

A recent settlement between the National Labor Relations Board (NLRB) and hedge fund giant Bridgewater Associates sheds light on the heavy hand employers wield to quash employee workplace claims, prevent them from disclosing employment details, and force them away from the courtroom and into mandatory arbitration.

NLRB vs. Bridgewater

In June 2016, a regional NLRB director in Boston issued an administrative complaint against Westport, Connecticut-based Bridgewater, alleging that the company unlawfully retaliated against an employee who alleged to be the victim of sexual harassment by a male supervisor and who had threatened to file an unfair labor practice claim against his employer over the handling of the charge. Importantly, the NLRB complaint also targeted Bridgewater’s policy of requiring its more than 1,500 full-time employees to sign a form agreement that limits their right to disclose job terms and conditions, requires them to keep any non-public information confidential, bars them from disparaging colleagues, and forces them to submit to individual arbitration while waiving their right to participate in class action suits.

These practices, the NLRB argued, violated the federal National Labor Relations Act, and Bridgewater’s overly restrictive employment contract interfered with workers’ rights to organize with respect to the terms and conditions of their employment. In its defense, Bridgewater asserted that the nature of the financial industry and strict regulations imposed upon brokers to protect confidentiality entitled the company to protect itself from disclosure threats.

Ultimately, the parties reached a “non board settlement” that prompted the NLRB to withdraw its complaint shortly before a scheduled administrative hearing. Reports of the agreement indicate that the former employee received no money damages for his alleged harassment and retaliation, but was released from his non-compete obligations.

Increasing administrative Scrutiny

The NLRB’s pursuit of Bridgewater may be a signal that financial services firms and other companies not known for having a labor presence are now in the agency’s crosshairs, though the Board’s action is consistent with heightened scrutiny from the U.S. Equal Employment Opportunity Commission and the Securities & Exchange Commission over workplace policies that chill employee rights and protections.

In recent blog posts, we have discussed the substantial bounties the SEC has paid whistleblowers under Dodd-Frank, Sarbanes-Oxley Acts, and other federal statutes, as well as increased anti-retaliation measures the EEOC has introduced in conjunction with employee protections under the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Equal Pay Act.

Understanding Your Employment Contract, Know Your Rights

Employees who question the legality of their employment contracts, along with job seekers who are being asked to sign employment agreements, should be aware of certain red flags identified by the NLRB’s General Counsel in a 2015 memorandum:

  • You have the right to discuss wages, hours, and other terms and conditions of employment with fellow employees, as well as with nonemployees, such as union representatives.
  • You have the right to criticize or protest your employer’s labor policies or treatment of employees.
  • You have a right to argue and debate with others about unions, management, and their terms and conditions of employment.
  • You have the right to communicate with the news media, government agencies, and other third parties about wages, benefits, and other terms and conditions of employment.
  • You have the right to engage in concerted activity to improve the terms and conditions of your employment, even if that activity conflicts with your employer’s interests.

Whether companies can require workers to waive their right to bring class action lawsuits is an unanswered question, though the NLRB and various federal appellate courts have held such provisions to be an unlawful forfeiture of employees’ rights. The U.S. Supreme Court agreed on January 13, 2017 to decide the issue, and will likely hear arguments in April before rendering an opinion by the end of its June term.

The attorneys at Outten & Golden are deeply familiar with employment contracts and employers’ use of overly broad and oppressive contract language. If you have questions about your employment contract or suspect that your workplace rights are at risk, please contact us to discuss your situation.

(*Prior results do not guarantee a similar outcome.)