The National Labor Relations Board (Board) issued a decision in February which should be on every employer’s radar, even if your employees are not unionized. The decision, McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023), limits the confidentiality, non-disclosure, and non-disparagement terms employers may include in severance agreements with their lower-level employees. In the decision, the Board reversed course from two recent decisions which provided more latitude to employers in what they could include in agreements with former employees as long as signing the agreement was voluntary and the agreement was not offered under coercive conditions.
In McLaren Macomb, the Board snaps back to its earlier line of cases that held that provisions in a severance agreement that restrict an employee’s participation in the Board’s unfair labor practice proceedings violate the National Labor Relations Act (the Act). The Board also signaled that it may expand on this precedent, testing not just whether a severance agreement interferes with participation in an unfair labor practice proceeding but also whether it restricts an employee’s ability to exercise other rights protected by Section 7 of the Act. Because Section 7 gives employees the right to talk about working conditions with other employees and even the general public, broad-based confidentiality and non-disparagement clauses will likely run afoul of the new requirements. In March, the General Counsel issued additional guidance that indicated that the NLRB will broadly interpret this holding and go after not only confidential, non-disparagement, and non-disclosure clauses but any portion of a severance agreement that might restrict a former employee’s participation in Board proceedings or exercising his or her Section 7 rights.
For most employers this means that it is time to review the language in severance agreements to ensure compliance with these new constraints. Though not every agreement will need to change – for example, the Act generally does not cover groups such as supervisors, managers, executives, or independent contractors – if your organization uses a standard template for all separation agreements, then such a template should be revised accordingly.
The March guidance also answered some other open questions from the McLaren decision as well: the Board will apply this decision retroactively and, although the Act has a six-month statute of limitations, the Board will view an employer’s efforts to enforce any unlawful provisions of a severance agreement older than six months as a new violation.
For these reasons, if you are an employer and you offer severance or any other type of separation or employment agreement that contains confidentiality, non-disparagement, or non-disclosure clauses to your lower-level employees covered by the Act, now is the time to review these agreements with counsel to determine what changes you may need to make to such agreements going forward and how to handle enforcement of previous agreements, if the need arises.
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