Mortgage lender’s employment contract deemed unlawful

DEPOSIT PHOTOS

A ruling by an administrative law judge has affirmed that the employment agreement mandated by United Wholesale Mortgage (UWM), one of the largest U.S. mortgage lenders, contains multiple provisions that violate federal labor laws and unlawfully restrict workers’ protected rights.

The decision orders UWM to rescind unlawful sections of its employment contract and distribute a corrected version to over 6,000 current and former staff. UWM reportedly disputes the findings and plans to appeal.

The lender’s employee agreements contained restrictions regarding confidential information, use of company property, and mandatory arbitration that the judge found to be overly broad, potentially discouraging employees from engaging in activities protected under the National Labor Relations Act (NLRA).

• Confidentiality: The judge took issue with the agreement’s broad definition of “Proprietary and Confidential Information,” which could be interpreted to include workplace disputes and unfair labor practice allegations. Furthermore, the company’s definition of protected “Company Financial Information” explicitly includes “compensation.” As such, the confidentiality clause could lead employees to believe they could not discuss salary information with other employees or a labor organization, a prohibition the National Labor Relations Board has consistently held as unlawful.
• Return of company property: Additionally, the judge found provisions governing use of company records and equipment to be overly broad, as they could be interpreted to prohibit employees from using documents to report unlawful workplace activities.
• Arbitration: The agreement’s mandatory arbitration clause also failed to expressly permit employees to file charges or complaints with the NLRB.

While the contract did contain a disclaimer allowing reports of suspected violations to authorities, the judge ruled this carveout insufficient since it was limited to the “right to report” and did not clearly state employees retained the right to file charges.

The judge also took issue with the placement of the disclaimer. She found insufficient reference and connection between the disclaimer on page 2 and the arbitration clause on page 14. In addition, she found that the disclaimer was “not prominent and does not have its own heading…. Thus, far from explicitly modifying the arbitration provision, it appears that Respondent is attempting to bury it.”

UWM has been ordered to cease enforcement, rescind the problematic sections from all current employment agreements, and distribute revised contracts excluding the provisions found to violate the NLRA.

This ruling demonstrates that even common employment contract terms can run afoul of labor laws if not narrowly tailored.

Companies across all industries may need to reevaluate their own agreements in light of this development.