7/27/2019 265_107.pdf

1/8

INTERNATIONAL BUSINESS MACHINES CORP.International Business Machines Corporation andRichard Hudson. Cases 2-CA-17141 and 2-CA-17246

December 6, 1982DECISION AND ORDER

BY MEMBERS FANNING, JENKINS, ANDZIMMERMAN

On February 23, 1981, Administrative LawJudge Benjamin Schlesinger issued the attachedDecision in this proceeding. Thereafter, the Gener-al Counsel filed exceptions and a supporting briefand the Respondent filed an answering brief.Pursuant to the provisions of Section 3(b) of theNational Labor Relations Act, as amended, the Na-tional Labor Relations Board has delegated its au-thority in this proceeding to a three-member panel.The Board has considered the record and the at-tached Decision in light of the exceptions andbriefs, and has decided' to affirm the rulings, find-ings, and conclusions of the Administrative LawJudge and to adopt his recommended Order, forthe reasons set forth below.In adopting the Administrative Law Judge's De-cision, we note that the General Counsel concededthat the Respondent's sole motive for dischargingHudson was Hudson's knowing breach of its confi-dentiality rule. Also, there is no allegation or evi-dence that Respondent's policy of classifying itswage information was designed, instituted, or main-tained for purposes which would contravene Sec-tion 7 of the Act.The Administrative Law Judge noted that Hud-son's distribution of wage data would, under ordi-nary circumstances, constitute protected concertedactivity. We agree. It is well established that dis-cussion of wages is an important part of organiza-tional activity. Thus, to the extent that an employ-er's policy of classifying its wage information"muzzles" employees who seek to engage in con-certed activity for mutual aid or protection bydenying the very information needed to discusswages, it adversely affects employee rights.I Nev-ertheless, it does not follow that the Respondent'spolicy is unlawful and cannot be enforced. For, inagreement with the Administrative Law Judge, wefind that the Respondent has established substantialand legitimate business justifications for its policy. 2

i See JeannetteCorp v. N.LR.B., 532 F.2d 916 (3d Cir. 1976).' Texas Instruments Incorporated, 237 NLRB 253 (1980), enforcementdenied 637 F.2d 822 (Ist Cir. 1981), is, therefore, distinguishable. Therethe Board found that a respondent had not established legitimate and sub-stantial business justification in support of its rule prohibiting dissemina-tion of a wage survey. The Board further found, unlike this case, that therespondent therein had released, at least to competitors, the information itsought to protect as confidential.

The issue, therefore, is whether the interests of theRespondent's employees in learning and discussingeach other's wages outweigh the Respondent's le-gitimate business interests in support of its policyso that, under the circumstances, Hudson's distribu-tion of IBM's data would fall within the protectiveambit of Section 7. We find that they do not. TheRespondent does not prohibit employees from dis-cussing their own wages or attempting to deter-mine what other employees are paid. Rather, theRespondent merely has chosen not to inform em -ployees what it pays others and the reasons there-for, and, in furtherance thereof, treats as confiden-tial the information it has compiled for its internaluse. The Respondent's policy does not itself baremployees from compiling or determining wage in-formation on their own. Further, the record is in-sufficient to support a finding that the policy so ad -versely affects the employees' ability to do so thatany attempt would be meaningless.3

This is not to say that the Respondent would beentitled to enforce its confidentiality policy by dis-charging any employee who disseminates its confi-dential wage information regardless of the circum-stances. Here, however, Hudson knew that thedocuments he received had been classified by theRespondent as confidential and he was aware ofthe Respondent's rule prohibiting dissemination ofsuch material. Nor did Hudson obtain the informa-tion under circumstances which would lead himreasonably to believe that his possession and dis-semination of the material was authorized. Accord-ingly, we shall dismiss the complaint in its entire-ty. 4

ORDERPursuant to Section 10(c) of the National LaborRelations Act, as amended, the National Labor Re-

lations Board adopts as its Order the recommendedOrder of the Administrative Law Judge andhereby orders that the complaint be , and it herebyis, dismissed in its entirety.

3 As the Administrative Law Judge noted, Sec. 8(aX5) obligates anemployer to provide a collective-bargaining representative with wage in-formation relevant to the appropriate unit. Contrary to our dissentingcolleague, there exists no concomitant Sec. 7 obligation affirmatively toprovide employees with wage information merely because such would fa-cilitate activity leading to the choice of a representative.

4 We have no disagreement with our dissenting colleague regardingthe importance of eliminating racial discrimination and its relationship toSec. 7 rights. However, Hudson's activity here fell outside the protectionof Sec. 7 not because of his purpose or motive but, rather, because of hismethod. While Hudson may have "innocently" obtained the Respond-ent's confidential wage data, he did not "innocently" distribute it, and wesee no reason to adopt what is essentially the "finders keepers" rationaleadvocated by the dissent. The fact of the matter is that Hudson knowing-ly distributed the Respondent's data, not his own.

265 NLRB No. 107

638

7/27/2019 265_107.pdf

2/8

INTERNATIONAL BUSINESS MACHINES CORP.MEMBER JENKINS, dissenting:I do not agree that the Respondent's wage confi-dentiality policy, however legitimate, outweighsthe employees' Section 7 rights.The facts are that the Respondent operates on a"closed" pay system which treats job classifica-tions, salary ranges, and other pay information asconfidential. 5 Pursuant thereto, it compiled its 1980salary guidelines for the use of its managers whichit classified as "IBM Confidential" and which itdistributed on a "need to know" basis.

Hudson, a longtime employee, also was presidentof the New York Chapter of the Black WorkersAssociation (BWA), an organization of Respond-ent's employees concerned with promoting equalemployment opportunities and eliminating racialdiscrimination at the Respondent. He also waseditor of the BWA Newsletter. In February 1980,an anonymous source mailed Hudson several pagesof the Respondent's 1980 salary guidelines. Al-though he was aware of the confidential classifica-tion of the document and of the Respondent's ruleprohibiting the dissemination of material so classi-fied, he also was aware that this was the precisetype of information needed in furtherance ofBWA's purposes. Accordingly, he prepared an ex-tract therefrom which he distributed at a BWAmeeting. The extract contained salary ranges forvarious jobs and the recommended timing and per-centage of increases for certain salaries. Uponlearning that he possessed the material, the Re-spondent informed him that he would be dis-charged if either he refused to turn it over to theRespondent or if he disseminated it. Hudson thense t forth an account of that warning and of his dis-tribution of the material in the BWA Newsletterand was discharged after telling the Respondentthat he had distributed it.Two facts are eminently clear: (1) Hudson ob-tained the information innocently, and (2) he dis-seminated it for the express purposes of invokinggroup action by BWA members to improve thewages of the Respondent's black employees and toeliminate alleged racial discriminatory employmentpractices against them. The majority agrees thatHudson's conduct is protected and concerted, andfurther concedes that the Respondent's confidentialwage policy adversely affects the employees' Sec-tion 7 rights. Nevertheless, the majority balancedthe conflicting employer-employee interests infavor of the Respondent, and thereby effectivelyinhibited the employees' statutory right to engage

a The basis for the confidentiality is the Respondent's contentions thatsuch a rule allows it to attract, motivate, and retain employees by allow-ing managers to reward employees on performance alone without havingto worry about creating dissatisfaction among other employees; inhibitscompetitors from stealing employees; and reduces resistance to transfers.

in collective action and, in substance, penalizedthem for utilizing lawfully acquired information forthe purpose of proving and eliminating the exist-ence of racial discrimination in the Respondent'semployment practices.It ha s been settled since Steele v. Louisville-Nash-ville Railroad Co., 323 U.S. 192 (1944), that racialdiscrimination in employment, whether by unionsor employers, is unlawful. It is equally well settledthat the principles enunciated in Steele apply to ac-tions arising under the National Labor RelationsAct.6 This judicial concept, moreover, was em -braced by the Congress in the enactment of TitleVII of the Civil Rights Act of 1964, so that nation-al labor policy specifically forbids racial discrimina-tion in the terms and conditions of employment. ?The concept, however, is meaningless if employeesare not permitted to inquire into the possible exist-ence of racial discrimination because of a businesspolicy, even if the policy is set in good faith, inorder to eliminate discrimination if it exists-andthis is precisely what Hudson and the employeeswere attempting to do.I agree that there are many areas of conflict be-tween employers and employees which may be bal-anced equitably in favor of one or the other, butprotected concerted activity concerning racial dis-crimination is not one of them. When that is thebasis for and the subject of the protected activity,there can be no legitimate business interest suffi-cient to suppress the activity. As I stated in my dis-sent in Farmers'Cooperative Compress, 194 NLRB85, 90 (1971), "It is the divisiveness, induced andfostered among the employees by the 'clash of in-terests' which the employer's racial discriminationcreates, which is the source of the unlawful re-straint and interference with the employees' exer-cise of their concerted rights. The employees areforced to expend their time, effort, and money toeliminate a condition of employment based on invi-dious differentiation (race) which is unlawful andthus should never have existed."

Prohibiting protected concerted activity de-signed to inquire into and eliminate any such dis-crimination cannot be "balanced," and thereby legi-timated, on any theory of preserving the Respond-ent's business practice or operation, for that prac-tice itself clearly interferes (or may do so ) with theemployees' rights in this case. It is immaterial that"the Respondent does not prohibit employees fromdiscussing their own wages or attempting to deter-mine what other employees are paid."8 My col-

e Wallace Corporation v. N.LR.B., 323 U.S. 248 (1944).7Sec. 704(a), 42 U.S.C. Sec. 2000 (3)-3(a).^ It would seem that an extension of this reasoning to the ultimate isself-defeating, for if the employees followed the majority's prescriptionContinued

639

7/27/2019 265_107.pdf

3/8

DECISIONS OF NATIONAL LABOR RELATIONS BOARD

leagues' reliance on this point is contrary to thepurpose of the statute to permit employees to orga-nize themselves freely for collective bargaining andother concerted activity even before the formationof or in the absence of a union. For the Adminis-trative Law Judge notes, apparently with the ma-jority's approval, that, although the wage informa-tion would be available to a collective-bargainingrepresentative (which then could pursue BWA'spurposes), it is not available to the employees be -cause of the absence of such a representative and,moreover, although not available to them in thisforum, "likely . . . could be discovered" by themthrough legal action or by means of a complaintfiled with the Equal Employment OpportunityCommission. A union has, of course, an affirmativeduty to eliminate racial discrimination in favor ofequal treatment for all of its members, but the pur-suit of such equality is not within the exclusiveprovince of a union. If the information must be fur-nished to a union (as it concededly must) and neednot be treated as confidential by a union or in someother forum, there is no reason to treat it so here.Nor need the employees be represented by a unionin order to be entitled to the information; the infor-mation may make them decide to seek representa-tion by a union, but their right to make that choicecannot be impeded by withholding the information.

Even accepting the applicability of the majority'sbalancing test, which I do not, my colleaguessimply have not explained why Hudson's methodof disclosure is unprotected in this forum if a re-quired disclosure in a different forum can outweighthe precise business interests they find are notoutweighed here.

The underlying concept in this case is no differ-ent from that in Jeannette Corp. v. N.L.R.B., 532F.2d 916 (3d Cir. 1976), where the court consid-ered the company's rule prohibiting wage discus-sions among employees and found that the assertedpurpose of limiting "jealousies and strife" was anunacceptable justification. As the court there said,"dissatisfaction due to low wages is the grist onwhich concerted activity feeds. Discord generatedby what employees view as unjustified wage differ-ential also provides the sinew for persistent con-certed action." The purpose of Section 7 would befrustrated if employees are prohibited from usinginformation on wages in furtherance of statutorilyprotected activity even in the absence of a collec-tive-bargaining representative. Such a principlewould also enable the Respondent to maintain inand, after such discussions, compiled the results into a comprehensiveunified document, would the dissemination of that material breach theRespondent's policy so as to subject them to discipline? Hudson merelyshortened that process.

perpetuity unlawful racial discrimination by making"confidential" all data regarding such unlawful ac-tivity. The fact that the information was "the Re -spondent's data, not [Hudson's]," as my colleaguesstate, is irrelevant: so is all wage data or equal em -ployment information.

Moreover, even assuming that confidentiality canexist where the same information would otherwisebe available to employees (which I do not accept),any such confidentiality has been breached here.Thus, even on the "confidentiality" terms in whichmy colleagues frame the issue, the Respondent'sjustification for its action has disappeared.

My colleagues have taken too narrow a view ofa broad picture. There is far more involved herethan a simple "finders keepers" concept they haveascribed to me . Unfortunately, the result reachedhere assures the employees of suffering the conse-quences depicted in the remainder of that cou-plet-becoming "losers weepers."

Accordingly, I would find that the Respondentdischarged Hudson because he engaged in protect-ed concerted activity, in violation of Section8(a)(l).

DECISIONSTATEMENT OF THE CASE

BENJAMIN SCHLESINGER, Administrative Law Judge:This proceeding was heard by me in New York, NewYork, on November 12-14, 1980,1 based on two unfairlabor practice complaints, dated May 23 and 30,2 alleg-ing that Respondent International Business MachinesCorporation violated Section 8(a)(1) of the NationalLabor Relations Act, as amended, 29 U.S.C. 151, etseq., by threatening Charging Party Richard Hudsonwith discharge and later discharging him for distributingcertain confidential information pertaining to the timingand amount of prospective wage increases. The GeneralCounsel alleges that Hudson was engaged in concertedprotected activities under the Act for which he could beneither threatened nor discharged. Respondent deniesthat it violated the Act in any way.

Upon consideration of the record herein, 3 includingmy observation of the demeanor of the witnesses, and ofthe briefs filed by the General Counsel and Respondent,I hereby issue the following:

All dates herein refer to the year 1980, unless otherwise stated.' The relevant docket entries are as follows: The unfair labor practicecharge in Case 2-CA-17141 was filed by Hudson on March 18, and inCase 2-CA- 17246 on May 15 . The two complaints were consolidated by

the Regional Director for Region 2 on June 12.3 Both the General Counsel and Respondent moved to correct the offi-cial transcript in numerous respects. Neither opposed the motion of theother. Their motions are granted and the transcript is corrected accord-ingly.

640

7/27/2019 265_107.pdf

4/8

INTERNATIONAL BUSINESS MACHINES CORP.

STATEMENT OF FACTS AN D CONCLUSIONS OF LAW1. JURISDICTION

At al l times material herein, Respondent, a New Yorkcorporation, with offices and places of business in var-ious States throughout the United States, and a trainingcenter in New York, New York, has been engaged in themanufacture, nonretail sale, and distribution of comput-ers, information-handling systems, and office and relatedproducts. During the calendar year 1979, Respondent de -rived gross revenues in excess of S1 million, of which inexcess of $50,000 was derived directly from firms locatedoutside the State in which it is located. I conclude, asRespondent admits, that it is now and has been at alltime material herein an employer engaged in commercewithin the meaning of Section 2(2), (6), and (7) of theAct.

II. THE ALLEGED UNFAIR LABOR PRACTICESA. The Facts

Respondent, being in a highly competitive industry,with rapid technological change and emphasis on newproduct development, maintains strict controls on the useof its internal documents, insisting that all employees signupon their hire an agreement not to disclose to anyoneoutside of Respondent or use in other than Respondent'sbusiness any confidential information, either during orafter employment, except with Respondent's written per-mission. Hudson signed such an agreement when he wasfirst employed in August 1963 and soon after his hirebecame aware that salary information, which included anemployee's level of employment, salary range, and pro-jected increases and timing thereof, was confidential ma -terial, which under Respondent's rules was restricted tothose individuals with a need to know the information inconnection with their job responsibilities.If Hudson had forgotten his 1963 commitment, heshould have been reminded of it in 1973, when he wasgiven in a legal proceedings a document marked "IBMConfidential" and essentially indentical in format withthe one he is accused of distributing. In late 1973,Hudson instituted a Federal civil action against Respond-ent, charging it with discrimination in employment,6 inwhich similar documents; shortly before the trial, pursu-ant to his counsel's motion to permit him to consult withhis client in preparation for trial, subject to the court'sadmonition that, although Hudson could examine thedocuments in preparing his counsel for trial, counsel wasto advise Hudson of the confidentiality of the documentsand the limited use that Hudson could make of them;and, finally, at trial, when Hudson reviewed the docu-ments but was admonished not to use them for any pur-pose other than the trial. Further, in 1977, Hudson wasgiven a document setting forth Respondent's securityclassifications, which included advice that confidentialdocuments were to be "sent or shown only to those em -

' Hudson filed a charge against Respondent with the New York Divi-sion of Human Rights.I Hudson was unsuccessful. Hudson v. IBM Corp., 22 FEP Cases 947(S.D.N.Y., 1979), affd. 620 F.2d 351 (2d Cir. 1980), cert. denied 49U.S.L.W. 3443 (1980).

ployees with an established 'need-to-know, either becausethey are required to take action or must be kept in-formed."6I am satisfied that, when in February 1980, Hudson re-ceived in the mail two pages of Respondent's 1980 salaryprogram guidelines, he knew that he had, to use the ver-nacular, a "hot potato." In fact, his lack of having thismaterial in years past caused him to complain that theguidelines were being withheld from employees' viewsso that, inter alia, Blacks could be discriminated against.Also, knowing that dissemination of the confidential ma-terial could result in discipline, Hudson had previouslyadvised members of the National Black Workers' Alli-ance of IBM Employees (BWA)7 that, if they obtainedany material, they should submit it to him anonymouslyso that they could not be pinpointed for discipline. 8Hudson retyped the information on the two sheets, cor-related the monetary figures thereon with job levels andposition titles that he had learned of over the years (thelevels and titles were also confidential information), an dinserted them in a draft newsletter which he distributedto at least three other members of BWA.

On March 7, he distributed 15 copies of a handout at aBWA meeting in Washington. The material containedsalary ranges for various job levels and recommendedtiming and percentage increases for salaries extractedfrom the guidelines. On March 17, Thompson toldHudson that Respondent knew that Hudson had confi-dential salary information. When Hudson admitted thathe had, and that he was trying to figure out what to dowith it, Thompson directed him to return the material bythe following morning and that, if he did not, or if hedisseminated it, he would be subject to dismissal.

The following morning, March 18, Hudson broughtthe two pages to Thompson, along with a letter he pre-pared, allegedly memorializing his conversation withThompson the prior day and setting forth Hudson's de-fense. Thompson, too, had a letter for Hudson, confirm-ing his conversation of the prior day and specifically ad-vising Hudson that:

. . . you are to see that these IBM confidential doc-uments are not published or given unauthorized dis-tribution. If you fail to comply with either of thesedirectives [the other being to return the documents],you will be subject to dismissal from IBM.

Hudson made no mention, either orally or in his letter,of the fact that he had already distributed this material,6 Although I have not credited Hudson, I note his testimony that hehad been advised by his managers that he was no t allowd to discuss evenhis own salary with anyone else.I BWA has a membership of approximately 1,700-1,800 present andformer employees of Respondent who are affiliated with six regionalchapters in the eastern United States. Its principal object appears to be

the establishment of employment opportunities and economic parity ofBlack employees with other employees of Respondent and, concomitant-ly, the prevention of racially discriminatory employment practices.Hudson is president of the New York chapter and editor of its newslet-ter, which attempts to educate its members about Respondent's allegeddiscriminatory practices.* Th e two pages had been tnmmed to remove any markings that might

reveal where they had been photostated.

641

7/27/2019 265_107.pdf

5/8

DECISIONS OF NATIONAL LABOR RELATIONS BOARD

nor did he comment that he had prepared a draft news-letter containing the confidential information. However,when Thompson asked him whether he had returned allthe material, Hudson admitted that his brother had onecopy; and Thompson, soon after the meeting, directedHudson to retrieve it immediately. Hudson traveled tohis brother's house, allegedly ascertained that his brothernever had the material, and returned to Thompson toinform him that there was no other copy.Because of Thompson's warning, Hudson revised hisBWA Newsletter, inserting an article about the warninghe received, which included an admission that he haddistributed the material on March 7. When the newslet-ter was brought to Thompson's attention, Thompson me twith Hudson on May 14 to confront him with the priordistribution. Hudson admitted it; and, on May 15,Thompson terminated Hudson's employment.

B. CredibilityIn the recitation of facts, wherever there has been a

conflict in the testimony, I have credited principally thewitnesses called by Respondent. Although Hudson ap-peared to be well-intentioned, he nonetheless was lackingin candor, often giving answers which contradicted hisinvestigatory affidavits and which were inconsistent, self-serving, imaginative, improbable, and evasive. In particu-lar, I am entirely skeptical of Hudson's unsatisfactoryand improbable recounting of his visit to his brother torecapture the confidential wage information. In discredit-ing Hudson, I have also considered the difference be-tween his testimony of his March 17 conference withThompson and the letter he gave to Thompson the fol-lowing day; Hudson's self-serving explanation that hecould distribute the confidential information to his fellowemployees because they had a "need to know" it underthe Act, whereas Respondent's rule concerning dissemi-nation could not reasonably be so construed; similarly,his averment that he thought distribution was permissi-ble, despite the fact that he took inordinate precautionsto ensure the anonymity of his sources of the material;and his denial that he read Respondent's documentsduring the legal proceedings, when it is obvious that hehad been attempting to obtain this information for yearsand that he was so thoroughly immersed in the issues in-volved herein that he conducted legal research in orderto ensure his right to the salary information.

At the hearing, the General Counsel contended thatRespondent's rule wa s ambiguous and that Hudson didnot understand its full import. Assuming, as a matter oflaw, that said facts are sufficient to support a conclusionthat Hudson should not have been discharged,9 I specifi-cally find that the rule was not ambiguous and thatHudson, in any event, clearly understood that he was en-titled neither to possess the confidential guidelines nor todisseminate them.

9 The General Counsel's brief seemingly abandons this theory. Itshould be briefly noted that an employer may discharge an employee forgood reason, for bad reason, or for no reason at all, as long as the truemotivation for the employer's action is not in violation of the Act.

C. DiscussionThe legal authority relating to this issue is scant. In

Jeannette Corporation, 217 NLRB 653 (1975), the Boardheld that an employer violated Section 8(a)(l) of the Actby enforcing its rule prohibiting employees from discuss-ing their wage rates among themselves. These discussionsconstituted concerted protected activities because theywere engaged in to promote group action seeking to im -prove wages, a basic right under the Act. Respondent'srule herein does not prohibit employees from talking toother employees about their own wages, and the GeneralCounsel (despite Hudson's discredited testimony) makesno contention that Respondent has violated the Act inthis respect. Nor does Jeannette deal with an employer,like Respondent, which reveals no wage information toits employees.

However, Jeannette becomes important because, on en-forcement, the Court of Appeals for the Third Circuit(532 F.2d 916 (1976)) set forth a three-step test for deter-mining the validity of an employer's rule dealing withthe confidentiality of wage information. First, it must bedetermined whether the rule adversely affected employ-ees' Section 7 rights. If it does, the second step shifts theburden to the employer which must establish that therule wa s based on "legitimate and substantial businessjustifications." Even if the employer meets this burden,the third step requires that the Board apply a balancingtest to determine whether the employees' Section 7rights outweigh the employer's business justifications; ifthey do, the Board shall find that the rule and its appli-cation have violated Section 8(a)(1) of the Act.In Texas Instruments Incorporated, 236 NLRB 68(1978), the Board found that the employer had violatedSection 8(a)(3) and (1) of the Act by discharging six em -ployees who, while engaged in organizational leafletting,knowingly distributed material which contained classifiedwage survey information, including the employer's com-petitors' wage rates, in violation of an employer rule pro-hibiting "[d]isclosure of classified material to unauthor-ized persons." The Board found, inter alia , that by soclosely connecting its own wage rates to the wage sur-vey's results, and indeed telling employees that their paycompared favorably with what employees elsewherewere receiving, the employer had in effect incorporatedthe other companies' wage scales into its own and thatthe employer could not place greater restrictions on dis-cussion or disclosure of other employers' wages than itcould place on the discussion of its own wages.As to the latter restriction, the Board found an 8(a)(1)violation in the employer's policy classifying wageschedules as confidential l and thus barring employeesfrom publicizing among any persons other than fellowemployees the wage scales (but not their own individualwages) paid by the employer to its own employees. TheAdministrative Law Judge wrote, page 72:

'o Texas Instruments is unclear as to whether the employer withheldwage information from its ow n employees. Because of a lack of factualfinding, I infer that, unlike the facts herein, the employees knew whattheir fellow employees were being paid

642

7/27/2019 265_107.pdf

6/8

INTERNATIONAL BUSINESS MACHINES CORP.It would be difficult to imagine a substantive sub-ject in the area of conditions of employment morepertinent to self-organizational activities than thewages an employer pays its entire employee com-plement. If the employees cannot talk about that, tothe public, to possible professional union organizers,to anybody on the sidewalk, they are effectivelymuzzled where it counts most.

Only this part of the Board's order was enforced[Texas Instruments Incorporated v. N.LR.B., 599 F.2d1067 (Ist Cir. 1979)], the court of appeals otherwisenoting that the Board never determined the validity ofthe employer's rule against dissemination of classifiedmaterial such as the wage survey data and that "theBoard must focus on the issues of the validity of the ruleinvoked by the company to justify the discharges, just asit did in Jeannette Corp. v. N.LR.B.," 599 F.2d at 1073.

On remand, the Board [Texas Instruments Incorporated,247 NLRB 253 (1980)], applying the Jeannette three-steptest,' found that the employer's rule adversely affectedemployees' protected rights, because the employees,while leafletting, were engaged in protected concertedactivity, encouraging collective action to improve wagesby disclosing otherwise confidential wage data to enforcetheir argument that only by means of a union couldhigher wages be assured. Such data, held the Board, was"the type. . . necessary to employees for making an in-formed decision about unionization." Having determinedthat the employer's rule adversely affected employees'protected rights, the Board considered the employer'sbusiness justifications for the rule and found them want-ing, for reasons discussed, infra. As a result, the Boardfound the rule invalid and the discharges based on therule in violation of Section 8(aX3) of the Act.The employer once again petitioned to set aside theBoard's Order, and its petition was granted, No. 80-1120(Ist Cir., January 7, 1981). The court of appeals foundthat the six employees were not engaged in protectedconcerted activities. The Court, rather than concentrat-ing, as the Board did, on whether employees had a rightto disseminate information in furtherance of their organi-zational goals, directed its attention to the employees' al-leged right to distribute the very information they ob-tained. The court held that the employees had no rightunder the Act to insist upon receiving access to the em -ployer's wage recommendation reports; that the wagesurvey report was indeed confidential, having been com-piled through the efforts of the employer's officials en -tirely for limited executive use; and that there was an ab-sence of evidence (assuming that it would be relevant)that the employer's organizing activities were peculiarlydependent upon having access to the confidential infor-mation. l 2" It is not clear that the Board adopted the First Circuit's decision as

its own, or only as the law of the case. The three-step test was not theBoard's, but the Third Circuit's. The General Counsel's brief, however,argues as if the Board accepted the Jeannette test as its own, and I sotreat the issue herein.a1 inding that the employer might nonetheless have invoked its rulefor impermissible antiunion purposes, the court assessed the employer'smotive and found no illegality under the Act. The General Counsel con-ceded during the hearing that Respondent's sole motive for warning and

It may be argued that the rule herein directly inhibitsself-organization' s more so than that in Texas Instru-ments, where wage data of other companies was with-held, for here is involved Respondent's conscious effortto hold back wage information from al l of its employees,including supervisors. As a result, it became impossiblefor employees to talk about wages, because they knownothing about wages-a result which arguably' 4 has "ef-fectively muzzled" discussion leading toward self-organi-zation protection of Section 7 rights.

In this sense, Respondent's rule could have adverselyaffected employees' rights under Section 7 of the Act,because employees have no access to wage information.But, unless the rule is itself invalid because it forbids dis-tribution and dissemination of wage material that em-ployees are never entitled to in the first place-and noauthority has been cited to support this proposition' -itseems difficult at best to contend that a valid rule losesits effectiveness once confidential information falls intounintended hands and is knowingly disseminated, despitethe knowledge of the employee that he should not haveeven had it.

In Bullock's, 24 7 NLRB 257, 258 (1980), the Board re-manded a proceeding to the Administrative Law Judgefor certain additional findings concerning the dischargeof an employee for discussion of confidential employeeevaluations, stating that if the employee

.. . had innocently obtained the information con-tained in the employees' evaluations and then dis-cussed them with her fellow employees, her con-duct would . . . be both concerted and protectedand her discharge, even if based on an honest butmistaken belief that she had wrongfully obtainedsaid evaluations, would be unlawful. However, if[she] had wrongfully obtained and copied the re -views herself, her activities would not be protectedby the Act and her discharge for engaging in suchmisconduct would be unlawful.

discharging Hudson was his violation of its rule regarding confidentialdocuments There is in the record herein no evidence of disparity, pre-text, or any other indicia of animus which the Board had traditionallyrelied upon to support a finding of an unfair labor practice.

I" Hudson and BWA were not engaged in self-organization for pur-poses of collective bargaining. Rather, they were attempting to ather in-formation to determine whether Respondent was racially discriminaingagainst its Black employees and, if so, to bring legal action to redress thatwrong. Under ordinary circumstances, the employees were engaged inprotected concerted activitie U. S Aostal Sernse,245 NLRB 901 (1979).

14 As stated, sumpa, the Court of Appeals for the Fiat Circuit, in itssecond decision in Texras Instmenta, noted, without passing on its rel-evance, the absence of evidence that the employees' organizing activitieswere "peculiarly dependent upon having access to the confidential infor-mation." Because Hudson's and BWA's object was to file a complaintwith the Equal Employment Opportunity Commission or to institute alegal action, it is likely that the wage information could be discoveredthrough such proceedings." It is gainsaid that an employer has no right, under Sec. S(aX5) of theAct, to withhold from the collective-bargaining representative of its em-ployees wage information pertaining to the appropriate unit. Here, thereis no bargaining representative. The General Counsel's position hereinwould allow two employees, acting in concert, to request Respondent'swage information and require Respondent to act favorably upon such re-quest.

643

7/27/2019 265_107.pdf

7/8

DECISIONS OF NATIONAL LABOR RELATIONS BOARDThis appears to be a somewhat different test from that

stated by the Board in Ridgely Manufacturing Company,207 NLRB 193, 196-197 (1973), to wit:The applicable rule of thumb seems to be that em-ployees are 'entitled to us e for self-organizationalpurposes information and knowledge which comesto their attention in the normal course of work ac-tivity and association, but are not entitled to theirEmployer's private or confidential records.See also Bell Federal Savings & Loan Association, 214

NLRB 75, 78 (1974), which limited use of employer in-formation to that which was "openly available" to em -ployees in general.Whichever test is applicable, I find that Hudson's ac -tions were not protected. Under Ridgely, he did not re-ceive Respondent's confidential information in thenormal course of his employment. Under Bullock's, heneither innocently obtained the information nor innocent-ly discussed it. Unlike Texas Instruments, and despiteHudson's protestations to the contrary, Hudson, if not di-rectly responsible for the release of the confidential ma -terial, promoted a violation of Respondent's rules.Knowing that the salary information was confidentialand that employees could be disciplined if they dissemi-nated such information, he counseled his friends to avoiddetection and, once he obtained the information, releasedit to other employees with full knowledge that he wasviolating Respondent's rule.As a result, I find that Hudson's actions were unpro-tected and conclude that Respondent did not violate Sec-tion 8(aX1) of the Act when it issued a warning to himand subsequently discharged him.Lest I have erred in this determination, and in order toavoid a remand for additional findings of fact, I shouldadd that I am persuaded that Respondent's rule is justi-fied by business considerations, the second step of theJeannette process. Respondent is one of many companieswhich operate on a "closed salary" basis. Typically, inmost organized companies, there is a collective-bargain-ing agreement in which employees' wages and scheduledincreases are provided. However, even where that is so,many employees, typically higher-paid managerials andprofessionals, do not know any of their colleagues' salaryrates or amount or expected date of an increase. Here, anemployee of Respondent knows only what he actuallydoes and what he is presently paid. He does not knoweven his job title, and where that ranks him in relation toother employees. No general wage schedules are pub-lished, and no employee knows (at least from Respond-ent) what his fellow employees earn. Not only that butincreases are no t standardized, either by timing oramount. Th e employee's individual supervisor has broaddiscretion whether to grant increases, when to grantthem, and in what amount. The guidelines are merelythat, setting forth broad ranges of salaries for the ade-

quate employee to the exceptional, with suggested timingand amount of increases. A manager may give less ormore than that which is recommended.

Respondent contends that there are a number of rea-sons for its modus operandi. In general, it attracts, moti-vates, and retains the highest calibre of employees. It en-courages employees to reach their maximum perform-ance by enabling managers to reward superior employeesbased on performance alone, and without limiting theamount of financial reward.' 6 It inhibits competitorsfrom "stealing" particular employees. It inhibits employ-ee resistance to transfers to other areas of the country.The General Counsel attempts to impugn these objec-tives, but it is unnecessary to answer each point specifi-cally. It should be sufficient to say that the Board maynot substitute its business judgment for that of Respond-ent, merely because it may be arguable that another ap -proach is equally sound. On the other hand, a speciousargument may be subject to attack if, by reason of otherevidence, Respondent's alleged justification is patentlyfalse. For example, in Texas Instruments, the allegedlyconfidential information had already been distributed bythe employer to its competitors, leaving no substance tothe employer's argument that the employees could notdistribute certain information because it would permit itscompetitors to know of the same data. Here, with onepossible exception, which I find was solely by inadver-tence'17 Respondent never revealed to any of its compet-itors the current information of recommended salary per-centage increases and timing thereof, as was distributedby Hudson;'8 and the information supplied was so gener-al that it could not have been useful to Respondent'scompetitors for recruitment purposes.

Upon the foregoing findings of fact, conclusions oflaw, and the entire record, and pursuant to Section 10(c)of the Act, I hereby issue the following recommended:ORDER' 9

The General Counsel's Exhibits 5-7, 9, 26, 29, and 30-36 and Respondent's Exhibits 3, 4, and 6 are to be main-'1 Respondent has facilities not only in the United States, but also

overseas. In Germany and France, where governmental policies requireopenness of salaries, Respondent's experience has demonstrated that man-agers, because of employee pressure, have not been able to exercise theirdiscretion in granting increases as have those in the United States; andthe spread of salaries between the satisfactory and superior performers isapproximately two-thirds less than that in the United States.

IT A document given erroneously in one of the surveys in which Re-spondent participated did not set forth the timing of increases or how theincreases were to be calculated. The number of the levels described wasfar less than that revealed by Hudson.sa In another survey, an estimate of the probable movement of Re-

spondent's rate ranges was supplied to other companies. This was, how-ever, more akin to an economist's prediction and was, in fact, incorrectfor II of 12 years. Further, the estimate wa s a general one to be appliedto all of Respondent's employees, rather than to each level or position ofemployment.Is In the event no exceptions are filed as provided by Sec. 102.46 ofthe Rules and Regulations of the National Labor Relations Board, thefindings, conclusions, and recommended Order herein shall, as providedin Sec. 102.48 of the Rules and Regulations, be adopted by the Board and

644

7/27/2019 265_107.pdf

8/8

INTERNATIONAL BUSINESS MACHINES CORP. 645

tained under seal, subject to examination by the Boardand any reviewing court of appeals, and all parties tothis proceeding are directed not to disclose the contentsof said Exhibits;2 0 and it is further ordered that the com-plaint herein is hereby dismissed in its entirety.'0 During the course of the hearing, I granted, upon consent all par-ties, Respondent's request to place under seal certain confidential docu-ments received in evidence and directed that the parties not disclose theircontents. The Order herein merely continues in effect that direction.