Last week, the National Labor Relations Board (“NLRB”) ruled that severance agreements that include confidentiality or non-disparagement provisions that “have a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights” under the National Labor Relations Act (“NLRA”) are unlawful.
In McLaren Macomb, 372 NLRB No. 58 (2023), a hospital offered employees a severance agreement and general release that contained confidentiality and non-disparagement provisions. Specifically, the confidentiality clause stated the employee agreed not to disclose the terms of the agreement “to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.” The non-disparagement clause stated the employee agreed “not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives.”
The NLRB ruled that the provisions were unlawful because, among other things, the provisions restrained employees from discussing the agreements and workplace matters with others, making public statements about the workplace, and filing unfair labor practice charges or participating in a NLRB investigation. Per the NLRB, these provisions violated Section 7, which provides employees with the right to act together to improve their working conditions. The NLRB’s decision applies to severance agreements offered to both union and non-union employees, but the decision does not apply to severance agreements offered to executives, managers, and most supervisors.
Based on this decision, employers should consult with legal counsel to review whether their severance agreements comply with the NLRB decision and discuss whether revisions to their severance agreements are necessary. Potential courses of action include adding a NLRA disclaimer to the severance agreements or removing the provisions from the severance agreements. Please contact a member of the Metz Lewis employment law group or your Metz Lewis contact to discuss the best course of action for your company.
