Dominick Reuter/Business Insider
Costco’s policies surrounding internal investigations are under scrutiny for being “overly broad” and in violation of employees’ rights.
On Monday, US National Labor Relations Board judge Andrew Gollin decided against Costco in a matter involving the confidentiality agreements that workers are expected to sign when raising issues with management.
The specific case was brought on behalf of Jessica Georg, who in 2022 used Costco’s “Open Door” policy to file an internal complaint that she was sexually harassed by a co-worker, according to filings.
As part of the process, Georg was required to sign a confidentiality agreement that barred her from discussing the open matter with coworkers. She later received a letter from Costco that said the employee was fired, the case was closed, and that “we hope and expect” that the information would continue to remain confidential, according to filings.
The NLRB and Georg each declined to comment for this story, and neither Costco nor its attorney responded to Business Insider’s request.
In a briefing, Costco’s lawyer Paul Galligan argued that the confidentiality rules are intended to protect the integrity of the investigation and are in the shared interest of the company and workers.
“It helps employees to be candid in their statements knowing that their statements will be treated confidentiality. It is probably more critical in an industry like retail where employees work closely together,” Galligan said.
He also said in the briefing the rules aren’t intended to dissuade employees from discussing things like wages, working conditions, or forming a union.
But Costco’s investigation found that the individual about whom Georg complained also had several prior complaints filed against him, and Georg later testified she felt she or her coworkers with similar experiences felt they might be risking their jobs if they shared information about alleged patterns of behavior by an individual employee about whom they had raised concerns.
A more tailored confidentiality agreement could still protect sensitive information while still assuring workers of their rights to protect themselves against harassment, the NLRB attorneys said in a brief.
The NLRB attorneys argued that Costco’s policy “appears to instead protect the harasser who has had individual complaints dismissed over and over, because no one outside the investigator is privy to the serial nature of the harassment.”
Costco’s lawyer argued that the company’s employee handbook explains that the confidentiality requirement is not intended to discourage workers from exercising their rights. The NLRB argued, and the judge agreed, that having workers sign a separate form (as was the case here) could reasonably cause confusion for a typical worker and lead them to fear for their job.
Part of Judge Gollin’s proposed remedy is that Costco post a notice in the one warehouse where the violation occurred, since the NLRB did not prove conclusively that similar confidentiality forms were used at all of the company’s US locations.
The case now heads to the NLRB’s board, with exceptions to the decision due by June 2.
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