Audit, Compliance and Risk Blog

Employment Law, Confidentiality and Internal Investigations

Posted by Jon Elliott on Fri, Oct 12, 2012

employment lawDoes your organization ever conduct internal investigations to evaluate complaints about working conditions, claims of harassment or other inappropriate behavior, or concerns about individual, or group, law-breaking? If so, investigators probably try to keep the investigation confidential, in order to avoid internal embarrassment while preserving the status quo until the investigation reaches its conclusion.

Ideally, employees contacted about the investigation respect the need for confidentiality…but what if they don’t?

In late July the National Labor Relations Board (NLRB) ruled - in a sharply split decision - that Banner Health Systems had violated employment law, and specifically the National Labor Relations Act, when its human resources (HR) consultant routinely “asked” employees making a complaint not to discuss the matter with their "co-workers” while it investigated their complaints. During the NLRB proceeding, there was no claim that company policy, or the HR staffer, threatened the complaining employee with any disciplinary, or other, consequence for disregarding that request. NLRB’s Administrative Law Judge (ALJ) ruled that this request was permissible. Nevertheless, two of the NLRB board members decided that the human resources staffer’s request, “viewed in context, had a reasonable tendency to coerce employees, and so constituted an unlawful restraint of Section 7 rights” under the Act. The third board member dissented vigorously.

This decision has already been widely reported as a significant intrusion into employers’ efforts to keep their internal investigations confidential. But those reports tend not to discuss the “context” that two NLRB members found so important. Before you cast your vote, you should consider that context as well:

  • James Navarro had worked for Banner for three years as a “sterile processing technician”, assigned to ensure proper care and handling of surgical instruments. During one shift, he learned that the steampipe supplying steam and hot water to the sterilizer was broken. His supervisor, Ken Fellenz, instructed Navarro to use a lower-temperature sterilizer that also employed hydrogen peroxide, but Navarro could not confirm this alternative was sufficient. He was then told to use hot water from the coffee machine in the employees’ breakroom. He refused.

  • Fellenz reported to HR that Navarro had been insubordinate and tried to initiate disciplinary action, but because the employer had no formal procedure allowing use of either of the suggested sterilization alternatives, HR convinced Fellenz to instead pursue a formal “non-disciplinary coaching” procedure.

  • Navarro’s annual performance review occurred soon thereafter, and Fellenz graded Navarro’s overall performance as satisfactory but initially graded his performance in the “behavior” category as below expectations. Navarro objected to HR, and was asked to maintain confidentiality during the investigation. Ultimately, HR convinced Fellenz to change Navarro’s rating to “meets expectations.”

  • Navarro subsequently made a formal complaint to NLRB that the “non-disciplinary coaching,” proposed performance rating, and request for confidentiality all violated the Act, by retaliating against him for raising legitimate health concerns and then by coercing him to forgo his right to discuss violations with co-workers. During the hearing at NLRB, Fellenz and other employees testified to other behavioral issues and denied the rating was related to the sterilizer incident. The ALJ denied all three complaints; on appeal the three-member NLRB denied the first two but two of the three members found the “suggestion” amounted to unlawful coercion. They ordered Banner Health Systems to cease and desist from violating the Act, and to post a workplace notice promising not to prohibit employees from discussing pending investigations of employee misconduct.

Now that you know the context, do you believe that Navarro reasonably believed that HR’s suggestion of silence included an unspoken “or else”?

Whatever your opinion, do you believe that your organization’s HR and internal investigation policies adequately preserve the confidentiality of sensitive investigations without violating the National Labor Relations Act? The following checklist should help you think about these questions.

Implementation Checklist:

employment law

  • Does my organization have formal policies for internal investigations?

  • If so, do these policies define procedures for such investigations, including which types of investigations are sensitive and would benefit if information about them remains confidential until their conclusion? 

    - If so, do these policies distinguish the organization’s commitment to respect confidentiality from the organization’s expectation/hope that employees will also respect confidentiality? 

    - If so, do these policies state clearly whether disciplinary action will or will not be taken if an employee breaches confidentiality?


Where can I go for more information?

NLRB has posted cast materials including this decision, Banner Health System d/b/a Banner Estrella Medical Center and James A. Navarro (Case 28–CA–023438) on its website at


About the Author

Jon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 25 years. He was involved in developing 16 existing products, including Workplace Violence Prevention: A Practical Guide to Security on the JobSecurities Law: A Guide to the 1933 and 1934 Acts and Directors' and Officers' Liability.

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).

You may contact Mr. Elliott directly at:

Tags: Business & Legal, Employer Best Practices, Employee Rights, Workplace violence