On February 21, 2023, the National Labor Relations Board (“NLRB”) issued a decision in McLaren Macomb (“McLaren”), returning to a longstanding precedent holding that employers may not offer employees severance agreements with certain confidentiality and non-disparagement clauses that require employees to broadly waive their Section 7 rights under the National Labor Relations Act (“the Act”). The decision involved severance agreements offered to furloughed employees that prohibited them from making statements that could disparage the employer, and from disclosing the terms of the agreement itself.
Prior Precedent
The NLRB’s 2020 decisions in Baylor University Medical Center and IGT d/b/a International Game Technology held that in a separation agreement, an employer could lawfully include confidentiality and non-disparagement clauses, and clauses prohibiting employees from participating in claims brought by any third party against the employer, in exchange for severance payments.
The McLaren decision reverses these previous decisions.
McLaren Decision
In contrast to the NLRB’s 2020 decisions, the McLaren decision explains that simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act: “a severance agreement is unlawful if its terms have a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights.” The NLRB observed that an employer’s offer is itself an attempt to deter employees from exercising their statutory rights, at a time when employees may feel they must give up their rights in order to get the benefits provided in the agreement.
What Does This Mean for Employers?
The majority of the NLRB held that merely “proffering” a severance agreement containing confidentiality and non-disparagement provisions violated the Act because conditioning the receipt of benefits on the “forfeiture of statutory rights plainly has a reasonable tendency to interfere with, restrain, or coerce the exercise of those rights.” This means that it will likely not be a defense for employers to argue that, despite the inclusion of confidentiality and/or non-disparagement provisions, they have done nothing to enforce them.
For more information on confidentiality, non-disparagement, and other provisions in severance agreements, please contact us at info@mnklawyers.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.
