Confidentiality used to be HR gospel during investigations. Now, it might get you slapped with an unfair labor practice.
That’s the takeaway from Costco Wholesale Corp., JD-38-25, a fresh ALJ decision that puts another notch in Stericycle‘s belt, deepens the risk for employers, and shows why political delays in Washington are keeping management-side relief on ice.
What Happened at Costco?
In August 2022, a maintenance assistant at Costco’s Winston-Salem store, Jessica Georg, filed a sexual harassment complaint. During the investigation, Georg and other employees were required to sign a confidentiality form that:
- Prohibited audio recordings of any investigation-related interviews without consent,
- Demanded confidentiality during the investigation (with no clear end date) and
- Included a vague “savings clause” saying employees could still talk to lawyers, government agencies, and “others.”
After the case was closed in March 2023, Costco VP Tom Feely followed up with a letter reiterating that the information involved should still be treated as confidential.
Georg wasn’t having it. She filed a charge, and the NLRB’s General Counsel issued a complaint alleging violations of Section 8(a)(1) of the NLRA. The ALJ agreed.
Why the Rules Failed
Administrative Law Judge Andrew Gollin applied the Stericycle standard, which is designed to scrutinize facially neutral rules through the eyes of a reasonable employee. If a rule could reasonably be interpreted to chill Section 7 rights, it’s presumptively unlawful.
Here’s how Costco’s policies stacked up:
- The Confidentiality Clause? It was chilling. It prevented workers from discussing workplace harassment, seeking peer support, or criticizing the employer’s response.
- No Recording? Overbroad. The blanket ban wasn’t narrowly tailored and interfered with workers’ rights to document issues as part of protected activity.
- Feely’s Post-Investigation Letter? Reinforced the unlawful chill by extending restrictions without a compelling reason.
Even the “savings clause”, the go-to employer defense, didn’t pass muster. The judge found it too vague to override the chilling effect created by the surrounding threats of discipline.
Costco tried to argue the charge was untimely, but the ALJ said the continuing use of the forms kept the violation alive, and the Feely letter was “closely related” to the initial charge.
Stericycle’s Grip on Employer Policies
Here’s the kicker: this case is just the latest in a growing list of “normal” employer policies Stericycle has flipped on its head. Confidentiality rules, civility clauses, mutual respect statements, recording bans—it’s all fair game.
As attorney Cary Burke put it in his LinkedIn breakdown:
“This isn’t just about chilling effects anymore. It’s about how far removed HR compliance has become from practical realities—and how the Board now views nearly all employer conduct through a lens of suspicion.”
And he’s not wrong. Under Stericycle, it doesn’t matter what your intent was. If a reasonable employee could interpret the rule as limiting their rights — even if it also says they’re protected — you’ve got a problem.
What Employers Should Do Now
You’re playing with fire if you’re still using pre-Stericycle investigation language.
Here’s your immediate to-do list:
✅ Audit all HR investigation templates and related policies
✅ Narrow any confidentiality rules — make sure they’re time-limited and justified
✅ Ditch any blanket no-recording bans unless you have a strong, documented rationale
✅ Reword or rethink savings clauses — they must be clear, prominent, and explicit
✅ Train your leaders not to reinforce unlawful restrictions after an issue closes
The Bottom Line
Costco’s case should be a flashing red light for employers: What used to be compliance best practice is still potential ULP bait for now. Without a functioning NLRB majority to reset the standard, Stericycle remains the lens through which every policy will be judged.
It’s an ironic twist. The new administration may have unintentionally slowed down one of its core business priorities, rebalancing the NLRB by moving fast and breaking things in many
