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Severance, NLRB, and Employers.

Posted by Stephen B. Rotter | Mar 09, 2023 | 0 Comments

The NLRB recently ruled in McLaren Macomb that Severance Agreements containing confidentiality and non-disclosure provisions force workers to broadly give up their rights under NLRA Section 7 (which violates Section 8a)(1) of the Act), including their right to engage in concerted activity and discuss their employment terms and conditions.  What does this mean for Severance Agreements going forward?

Here are my recommendations for Employers:

1.   The ruling does not apply to managers, public sector workers, and most agricultural workers, so nothing changes in regard to utilizing Severance Agreements for this part of the workforce.

2.   If the employee's separation is not related to a sensitive area or conduct, either pull out any non-disparagement and confidentiality provisions OR don't offer the employee a severance agreement to begin with.

3.   Because the Board did not state that ALL such provisions are violative of the NLRA, it's possible (and perhaps worth the risk) of including a disclaimer as part of any confidentiality or non-disparagement provision – especially if the employee's separation is related to something sensitive. The disclaimer should likely include informing the employee that nothing prevents them from: a. discussing terms and conditions of employment as Section 7 allows; b. filing an unfair labor practice charge if warranted; and c. engaging in any agency's investigation. 

4.   The NLRB is limited in its ability to enforce violations; it can't issue penalties or fines. Thus, it's likely any remedy in the face of an Unfair Labor Practice charge would be requiring the Employer to cease and desist inclusion of its confidentiality and non-disparagement provisions in its Severance Agreements, and awarding attorney's fees and costs for the employee that brings the ULP.  Is that enough to dissuade Employers from continuing to use such provisions where they find it necessary? 

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