This case provides a cautionary tale for employers about the risk of maintaining and enforcing a broad confidentiality clause. Northeastern Land Services, Ltd. (“NLS”) petitions for review of the National Labor Relations Board’s finding that it violated section 8(a)(1) of the National Labor Relations Act (“NLRA”), 29 U.S.C. § 158(a)(1), by maintaining an overbroad confidentiality provision and by discharging its employee Jamison Dupuy for violating it. Ne. Land Servs., Ltd., 352 N.L.R.B. No. 89, 2008-2009 NLRB Dec. (CCH) ¶ 15,110 (June 27, 2008). The Board has filed a cross-application to enforce the order.
The case also raises an issue of first impression: whether a two-member Board decision complied with the quorum requirement of section 3(b) of the NLRA. We deny the petition and grant the Board’s cross-application for enforcement.
I.
Because “the Board is primarily responsible for developing and applying a coherent national labor policy, we accord its decisions considerable deference.”
NLRB v. Boston Dist. Council of Carpenters,
II.
The facts are not in dispute. NLS is a temporary emрloyment agency located in East Providence, Rhode Island which supplies workers to clients in the natural gas *38 and telecommunications industries, but pays its workers directly. Dupuy was employed twice by NLS as a right-of-way agent for the acquisition of land rights by clients, from February to November 2000, and from July to October 2001. Dupuy obtained the 2001 placement by contacting Rick Lopez, a project manager for NLS client El Paso Energy, who had once worked with Dupuy at NLS. Lopez directed Dupuy to contact NLS, which soon placed him with El Paso at its Dracut Expansion Project in Massachusetts.
Before both of Dupuy’s placements by NLS, NLS required Dupuy to sign a temporary employment contract which said, in relevant part:
Employee ... understands that the terms of this employment, including compensation, are confidential to Employee and the NLS Group. Disclosure of these terms to other parties may constitute grounds for dismissal.
This confidentiality provision is at the heart of this case.
Dupuy complained to NLS about repеated delays in receiving his paycheck. He was particularly concerned because he had to pay for expenses such as his hotel bills up front and later seek reimbursement. After Dupuy tried to negotiate with NLS, and even threatened to quit, Jesse Green, Executive Vice President and Chief Operating Officer of NLS, agreed to call Lopez to see if El Paso would either pay for Dupuy’s hotel bill or provide a larger per diem than NLS had offered to help with Dupuy’s cash flow problems. Although NLS ultimately billed most of Du-puy’s expenses to El Paso, NLS was responsible for reimbursing Dupuy. Green told Dupuy that Lopez would not agree to any alternative arrangements.
In early October 2001, Dupuy raised two additional concerns about his job. The first arose when Dupuy contacted Lopez to tell him that Dupuy’s cell phone was not working. Dupuy asked Lopez whether he might be able to work for El Paso through a different employment agency because Dupuy had not been paid in a timely manner by NLS. Lopez refused Dupuy’s rеquest and gave Dupuy the contact information of Norm Winters, an agent of NLS, to resolve the pay issues.
The second concern was the reimbursement for Dupuy’s work-related use of his personal computer. Dupuy had initially arranged to receive a $15~per-day reimbursement for computer usage. NLS treated this as a “pass-through” business expense for tax purposes, which did not count as income to the employee, and on which NLS did not pay Social Security taxes. On October 2, however, Dupuy rеceived an email from NLS’s coordinator of human resources, Susan Green, which referred to the computer usage reimbursement rate as $12 per day. Dupuy replied that El Paso had authorized, and he had been billing, $15 per day for computer usage; he questioned the $12-per-day rate. Green told Dupuy that NLS’s accountants had determined that the computer usage cost should be considered taxable compensation, rather than a pass-through expense billed to El Paso. Green stated thаt the reclassification of the tax status of the computer usage fee had increased NLS’s overhead costs, requiring an offsetting reduction of $3 per day.
Dupuy sent a reply email to Green, copying Lopez, stating, “By copy of this email to Rick Lopez, I am asking El Paso to offset your surcharge and additional tax burden.” He said that if he did not receive the, offset, “I will no longer be using my computer for this job. El Paso will have to furnish me with a digital camera, and I will no longer be available by email.... After today and until the matter *39 has been resolved, my equipment is offline.”
On the evening of October 3, he sent an email to everyone working with him on the El Paso project, including Rick Lopez, saying, “Until further notice, my computer is offline and I will not be accepting email. I can still be reached by the contact telephone numbers that you have.” Dupuy did not copy any NLS managers on the email. Jesse Green testified that although he tried to contact Dupuy numerous times by paging him, calling his cell phone and leaving messages at his hotel and with other employees, Duрuy did not call him back.
On October 11, 2001, Jesse Green spoke with Dupuy on the phone. Green told Dupuy that NLS had tried to accommodate his requests, but that it seemed that NLS could never make Dupuy happy and, as a result, NLS thought it was best to terminate his employment. Dupuy replied that he would sue NLS for retaliatory discharge, alleging that it fired him because he had threatened to file a complaint against the company with the Massachusetts Attorney General alleging violations of state wage laws. 1 When Dupuy pressed Jesse Green for the reason for his termination, Green replied that NLS had cause to terminate Dupuy’s employment, as Du-puy had “not lived up to [his] end of the bargain with [NLS].”
Jesse Green later testified that his statement regarding Dupuy’s “failure to live up to his end of the bargain” was a reference to Dupuy’s failure to comply with the confidentiality provision in the temporary employment agreement that required him not to disclose the terms of his employment to outside parties. Green, who had drafted the confidentiality provision, further testi-fled that in making the determination that Dupuy had violated the confidentiality provision by contacting El Paso directly, Green thought it was “inappropriate” for Dupuy to “approach a client with [his] ... problems [about salary], [because] then we’re not providing the services that we contracted to provide.”
Dupuy filed an unfair labor practice charge on October 24, 2001, and filed an amended charge on December 17, 2001. The complaint issued January 16, 2002, alleging that NLS violаted section 8(a)(1) of the NLRA by maintaining and enforcing an unlawful confidentiality clause in its employment contract that discouraged employees from engaging in protected concerted activities, and by terminating Dupuy’s employment on October 11 for violating the terms of that clause.
The ALJ found that although the provision did restrict the employees’ right to discuss their terms and conditions of employment with third parties, “there are different gradations in how seriously employees’ Section 7 rights are affectеd.” Relying on his reading of Board precedent, the ALJ found that the confidentiality provision did not violate section 8(a)(1), explaining that “because [NLS] did not prohibit discussions of terms and conditions of employment among fellow employees, I find [NLS’s] restriction a less serious infringement upon its employees’ Section 7 rights.” Relying on language from
Desert Palace Inc.,
On June 27, 2008, the Board, by a two-member panel, reversed the ALJ’s decision, determining that, under
Martin Luther Mem’l Home, Inc. (Lutheran Heritage),
As to the termination of Dupuy’s employment for violating the rule, the Board held, “Under extant Board precedent, an employer’s imposition of discipline pursuant to an unlawfully overbroad ... rule constitutes a violation of the Act.” NLS had conceded that it dismissed Dupuy because he violated the confidentiality provision. The Board concluded that “[NLS]’s termination of Dupuy pursuant to [the confidentiality] provision violated Section 8(a)(1).” In a footnote to the unlawful discharge analysis, the Board explained that one member, Chairman Schaumber:
[Ajgrees ... that application of Double Eagle Hotel & Casino dictates a finding that Dupuy’s termination violated Sec. 8(a)(1) of the Act. However, he questions the thеory that an employer’s imposition of discipline pursuant to an unlawfully overbroad rule is necessarily unlawful, such as in situations where the discipline imposed is for a lawful reason albeit under an overly broad, unlawful rule. Nonetheless, he applies precedent for institutional reasons for the purpose of deciding this case.
Ne. Land Servs., 352 N.L.R.B. No. 89 at 3, n. 9.
The Board ordered, inter alia, that NLS rescind the provision; that NLS notify its current and former employees under the temporary employment agreement of the decisiоn; that Dupuy be reinstated to his former position or a substantially similar position; that Dupuy be made whole “for any loss of earnings and other benefits suffered as a result of the unlawful action taken against him”; and that NLS ensure that the references to the unlawful discharge be deleted from NLS’s files.
III.
We turn to NLS’s challenge to the Board’s decision. NLS contends that the decision could not be properly issued because the Board lacked a quorum under section 3 of the NLRA, 29 U.S.C. § 153(b), in that it cannot delegate all of its powеrs to a two-person panel. On the merits, NLS argues that the Board erred in finding that the confidentiality agreement violated section 7 and in finding that Dupuy’s termination violated the NLRA. These arguments fail.
A. The Quorum Requirement
The first issue raised is one of statutory interpretation of section 3(b). We owe some deference to the agency’s view.
Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
The Board is authorized to delegate to any group of three or more members any or all of the powers which it may itself exercise.... A vacancy in the Board shall not impair the right of the remaining members to exercise all of the powers of the Board, and three members of the Board shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group designated pursuant to the first sentence hereof.
29 U.S.C. § 153(b).
Pursuant to that authority, the four members of the Board who held office on December 28, 2007 delegated the Board’s powers to a three-member group. When the term of one member of that group expired three days later, a two-member quorum remained. 2
The Board’s delegation of its institutional power to a panel that ultimately consisted of a two-member quorum because of a vacancy was lawful under the plain text of section 3(b). First, section 3(b) allowed the Board to delegate all of its powers to a three-member group. Second, the statute states thаt “[a] vacancy in the Board shall not impair the right of the remaining members to. exercise all of the powers of the Board.” The vacancy, which left the two-member quorum remaining, may not, under the terms of section 3(b), impair the right of the two-member quorum to exercise all powers of the Board. This is consistent with the conclusion of the Office of Legal Counsel of the U.S. Department of Justice which has concluded, “In our view, if the Board delegated all of its powers to a group of three members, that group could continue to issue decisions and orders as long as a quorum of two members remained.” Quorum Requirements, Memorandum from M. Edward Whelan III, Principal Deputy Assistant Attorney Gen., Office of Legal Counsel, (Mar. 4, 2003),
available at
Our conclusion is consistent with that of another circuit.
Photo-Sonics, Inc. v. NLRB,
Further, courts have upheld analogous approaches by other administrative agencies.
See Falcon Trading Group, Ltd. v. SEC,
B. Overbreadth of the Confidentiality Provision
Section 8 of the NLRA prohibits employers from “interferfing] with, restraining], or coerc[ing] employees in thе exercise of the rights guaranteed in” section 7 of the NLRA. 29 U.S.C. § 158(a)(1). Section 7 guarantees employees the right to “self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157.
Section 8(a)(1) has been read to bar employer interference with employees’ right to discuss the terms and conditions of their employment with others under section .7 of the NLRA.
See Beth Israel Hosp. v. NLRB,
An employer violates section 8(a)(1) when it maintains a work rule that “would reasonably tend to chill employees in the exercise of their Section 7 rights.”
Lafayette Park Hotel,
NLS contends that the confidentiality provision did not violate the NLRA because, as a factual matter, it did not prohibit employees from discussing terms of employment among themselves and, although it was enforced, it was not enforced in the face of union activity. NLS asserts that mere broad wording, without evidence of actual chilling of union activity, is insufficient to violate section 8(a)(1).
NLS then makes a qualitatively different argument: that the Board must engage in a balancing test. Here, NLS contends the Board failed to consider the *43 legitimate justification it had for the confidentiality provision: labor costs were a key component of its bids to clients, and NLS did not want its employees jeopardizing its bids. NLS’s arguments, however, are at odds with current Board precedent.
After the ALJ ruling and before the Board rendered its decision here, the Board decided
Lutheran Heritage,
In Lutheran Heritage, the Board articulated a two-step framework for determining whether an employer’s maintenance of a work rule violates section 8(a)(1). First, if the rule explicitly restricts section 7 activity, it is unlawful. Id. at 646. Second, even if the rule does not explicitly restrict section 7 activity, it is nonetheless unlawful if “(1) employees would reasonably construe the language [of the rule] to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.” Id. at 647.
Hеre, the Board relied on the first prong of the second part of the test. It found that although the NLS rule did not explicitly restrict section 7 activity, employees would reasonably construe the language of the rule to prohibit section 7 activity under Lutheran Heritage. The plain language of the confidentiality provision provides: “Disclosure of these terms [of employment] to other parties may constitute grounds for dismissal.” The Board’s finding that this language could be fairly read to extend to disclosure of terms of employment to union representatives is supportable. The precise subject matter of the forbidden disclosure — terms of employment, including compensation — went to a prime area of concern under section 7. 3
The Board’s interpretation was consistent with its prior caselaw.
4
See
*44
Cintas Corp.,
NLS argues that the Board should have considered that the confidentiality provision was justified by legitimate business reasons, citing
Republic Aviation Corp. v. NLRB,
C. The Termination of Dupuy’s Employment
NLS has conceded that Dupuy was dismissed for violating the confidentiality provision. “[W]here discipline is imposed pursuant to an overbroad rule, that discipline is unlawful regardless of whether the conduct could have been prohibited by a lawful rule.”
Double Eagle Hotel & Casino,
NLS claims that the discharge was lawful, relying on
Wright Line, a Div. of Wright Line, Inc.,
Wright Line
sets forth the test fоr assessing cases where the dispute turns on employer motive: whether the employer discharged an employee because of the employee’s union affiliation, or whether he
*45
acted because of some factor unrelated to the employee’s union status.
The Board did not err in not considering that Dupuy would have been discharged in the absence of a violation of the confidentiality provision. The Board supportably relied on its own precedents to determine that any discharge pursuant to an unlawful rule is itself unlawful. “The fact that one reason for [an employee’s] reprimand was lawful in no way diminishes the fact that the other reason was unlawful.”
AT. & S.F. Mem’l Hosps., Inc.,
We deny NLS’s petition for review and enter judgment enforcing the order of the Board.
Notes
. The alleged violations were NLS’s failure to pay Dupuy within six days of the end of the pay period and the deduction of $3.00 from his compensation due to the change in the rate of reimbursement for computer usage.
. The Board explained:
Effective midnight December 28, 2007, Members Liebman, Schaumber, Kirsanow, and Walsh delegated to Members Liebman, Schaumber, and Kirsanow, as a three-member group, all of the Board's powers in anticipation of the expiration of the terms of Members Kirsanow and Walsh on December 31, 2007. Pursuant to this delegation, Chairman Schaumber and Member Liebman constitute a quorum of the three-member group. As a quorum, they have the authority to issue decisions and orders in unfair labor practice and representation cases. See Sec. 3(b) of the Act.
Ne. Land Servs., 352 N.L.R.B. No. 89 at 1 n. 2
. NLS asserts that the confidentiality provision is lawful because the plain text of the provision did not forbid employees from talking to each other or to union organizers. This argument fails to address the Board's Lutheran Heritage analysis, which holds that a provision is unlawful if employees would reasonably believe it forbids such communication.
. NLS alludes to but does not develop an argument that the Board’s result is inconsistent with the prior caselaw, as demonstrated by the ALJ’s reading of the caselaw. We set aside NLS’s waiver and consider the point. We find no such inconsistency.
In interpreting NLS’s provision as a "less serious infringement on its employees’ Section 7 rights,” the ALJ relied on cases involving more narrowly drafted confidentiality provisions than the one at issue here.
See, e.g., K-Mart,
. To attack this principle, NLS cites only an ALJ's decision in
Electronic Data Systems Corp.,
No. 36-CA-7434,
