USA 
United Kingdom
Costco’s internal confidentiality rules have come under fire after a federal labour judge found that the retailer’s approach to misconduct investigations may violate employee rights.
The ruling, issued by National Labor Relations Board (NLRB) Judge Andrew Gollin, centred on a case involving a worker who filed a complaint of sexual harassment under the company’s “Open Door” policy. The judge determined that the confidentiality agreements employees were required to sign during investigations could deter staff from discussing legitimate workplace concerns, including harassment.
Costco employee Jessica Georg, filed a complaint in 2022 against a colleague she alleged had sexually harassed her. As part of the investigation, Georg was required to sign a confidentiality agreement forbidding her from discussing the matter with co-workers. She later received a letter confirming that the accused employee had been dismissed and that the case was closed, with a company request to maintain ongoing confidentiality.
Conflicting interpretations of staff protections
Costco argued that the requirement was in place to protect the integrity of investigations and to ensure employees could speak freely without fear of reprisal. Company lawyer Paul Galligan defended the policy in NLRB briefings, stating that confidentiality fosters candour, particularly in a close-knit retail environment. He also claimed the rule was not designed to suppress discussions about working conditions or unionisation.
The NLRB disagreed, arguing that the agreement, separate from Costco’s standard employee handbook, could confuse employees and have an effect on their willingness to share information about misconduct. In Georg’s case, further testimony revealed that multiple prior complaints had been made against the same individual, yet employees felt silenced by the confidentiality clause.
The NLRB contended that a more flexible policy could still safeguard investigation integrity while ensuring staff were not discouraged from reporting repeated misconduct or supporting one another.
HR implications for investigation protocols
Judge Gollin sided with the NLRB, ruling that the confidentiality agreement could reasonably lead employees to believe their rights were at risk if they spoke out. His recommendation includes a requirement for Costco to post a notice in the affected warehouse affirming workers’ rights. The board has not yet ruled on whether similar practices exist across the retailer’s wider US operations.
The case will now proceed to the full NLRB board, with exceptions to the ruling due by June 2. While the outcome applies specifically to one store, it has wider implications for employers and HR teams managing internal investigations across large organisations.
The ruling adds to ongoing scrutiny of workplace confidentiality practices, particularly as companies work to ensure compliance with both investigative integrity and labour law.
