Corporate Secrecy Interests Can Conflict with Employment Laws

Owen H. Laird, Esq.

On July 26, 2016, the New York Times reported on allegations of improper employment practices concerning Bridgewater Associates, an organization commonly considered to be one of the largest hedge funds in the world, if not the single largest. The Times article refers to a complaint filed against Bridgewater by a Bridgewater employee with the Connecticut Commission on Human Rights and Opportunities, a complaint filed against Bridgewater by the National Labor Relations Board, and interviews with former Bridgewater employees.

The article describes a culture of surveillance and control at Bridgewater, with video and audio recordings, security patrols, and even some employees who are required to lock up their phones before heading to their desks. In and of itself, such allegations would not be surprising. Hedge funds are notoriously secretive and controlling over their internal goings-on and strive to protect any advantage they might have over the competition; policies and practices intended to protect internal information are the norm in the financial industry.

The crux of the article is the complaint filed by Christopher Tarui with the Connecticut Commission on Human Rights and Opportunities, a state agency tasked with enforcing anti-discrimination laws. Mr. Tarui alleged in his complaint that he was routinely sexually harassed by his male supervisor. The harassment included being propositioned repeatedly for sex, as well as inappropriate physical touching.

A complaint of sexual harassment is, unfortunately, not unusual, and the simple act of filing a complaint of sexual harassment with an administrative agency rarely warrants coverage in the press. However, the interaction between the public interest in addressing claims of discrimination and the intense secrecy of hedge funds is what makes the Bridgewater story unique.

What differentiates this situation is the way that Bridgewater’s security policies crossed into potentially illegal territory: the complaint also alleges that Bridgewater used its secretive infrastructure in retaliation against Mr. Tarui. Mr. Tarui alleged that, after he made a formal complaint about his supervisor, Bridgewater’s management retaliated against him using its extensive security apparatus and encouraged him to withdraw the complaint. In addition, publication of the details of Bridgewater’s internal operations through a discrimination suit jeopardizes Bridgewater’s competitiveness. In March of this year, the Connecticut Commission on Human Rights and Opportunities complaint was withdrawn by request of Mr. Tarui and Bridgewater.

Mr. Tarui’s complaint is not the only way that Bridgewater’s secrecy is said to have violated the law; the National Labor Relations Board filed a complaint against Bridgewater alleging that Bridgewater’s confidentiality provisions violate the National Labor Relations Act (NLRA). As we have previously discussed, the NLRA gives employees the right to engage in certain protected activity related to organization. Included in the NLRA’s definition of protected activity is the comparison of salaries and the discussion of the terms and conditions of employment. These communications are prohibited under Bridgewater’s policies.

What these two complaints have in common is the allegation that Bridgewater’s information security policies can lead to illegal activity. Bridgewater has released a statement responding to the article in the Times, calling it inaccurate. Nonetheless, given that the trend in the workplace is toward ever greater control over information, we will likely see more employee-employer conflicts similar to Bridgewater in the future.

If you believe that your employer has violated the law through its policies, contact The Harman Firm, LLP.