A U.S. labor judge has ruled that Costco’s worker confidentiality agreements violate federal labor law. The case centers on an employee who was required to agree not to discuss an internal sexual harassment investigation, raising concerns that such policies may silence victims rather than protect them.
The National Labor Relations Board (NLRB) challenged Costco’s internal investigation policy, arguing that it is “overly broad” and violates employees’ rights. NLRB Judge Andrew Gollin ruled against Costco, stating that the confidentiality agreements employees are required to sign when raising workplace concerns with management are unlawful.
The ruling stems from a 2022 complaint filed by employee Jessica Georg, who used Costco’s “Open Door” policy to file a complaint of sexual harassment by a co-worker. As part of the internal process, Georg had to sign a confidentiality agreement that prohibited her from discussing the matter with coworkers. She later received a letter from Costco stating that the respondent had been terminated, the case was closed, and that all the information related to the case should remain confidential.
Costco’s lawyer, Paul Galligan, argued that the confidentiality requirement is intended to protect the integrity of the internal investigation and is in the company’s and employees’ shared interest. Galligan stated that these confidentiality rules help employees be candid in their statements, knowing they will be treated confidentially. According to Galligan, this is particularly important in the retail industry where employees work closely together.
Galligan also emphasized that the rules are not intended to dissuade employees from discussing wages, working conditions, or union formation. However, Costco’s investigation revealed that the individual about whom Georg complained had several prior complaints filed against him. Additionally, Georg testified that she and her coworkers felt they might be risking their jobs if they shared information about alleged patterns of behavior by the respondent.
The NLRB attorneys suggested that a more tailored confidentiality agreement could protect sensitive information while ensuring employees’ rights to discuss workplace issues and protect themselves against harassment. Attorneys argued that Costco’s policy “appears to protect the harasser who has had individual complaints dismissed repeatedly, because no one outside the investigator is aware of the serial nature of the harassment.”
In addition, Galligan contended that the company’s employee handbook explains that the confidentiality requirement is not intended to discourage employees from exercising their rights. However, the NLRB argued, and Judge Gollin agreed, that having employees sign a separate form could reasonably cause confusion and lead them to fear for their jobs.
Judge Gollin’s proposed remedy includes posting a notice in the warehouse where the violation occurred, as the NLRB did not prove that similar confidentiality forms were used at all of Costco’s U.S. locations. The case now heads to the NLRB’s board, with exceptions to the decision due by June 2, 2025.
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