NLRB Stops Companies from Using Broad Non-Disparagement and Confidentiality Provisions in Severance Agreements

1. The NLRB found that broad non-disparagement and confidentiality provisions in severance agreements are unlawful.
2. The NLRB emphasized that offering such agreements to employees is also unlawful.
3. The employer in McLaren Macomb engaged in impermissible actions when furloughing employees, including offering severance agreements without involving the union. 1. The severance agreements included non-disparagement and confidentiality provisions.
2. The non-disparagement provision prohibited making statements that could harm the image of the employer or its affiliates.
3. The confidentiality provision required the employee to keep the terms of the agreement confidential, with certain exceptions.
4. Section 7 of the Act guarantees employees the right to engage in concerted activities for mutual aid or protection.
5. The NLRB addressed the non-disparagement and confidentiality provisions in the context of employees’ rights to discuss the terms and conditions of their employment. 1. The NLRB found that the non-disparagement provision limits employees’ ability to discuss their departure from the employer and could restrict their NLRA rights.
2. The NLRB highlighted that the non-disparagement provision prohibits employees from making any statements that could disparage or hurt the image of the employer, without defining “disparagement” according to NLRA standards.
3. The NLRB noted that prior precedent requires public criticism of an employer to evidence a malicious motive or be maliciously untrue to lose protection under the NLRA.
4. The NLRB found that the confidentiality provision restricts employees from disclosing the terms of their departure to any third person, restraining their ability to exercise their Section 7 Rights. – Employers should review and possibly revise their existing severance agreements to ensure they do not infringe on statutory employees’ Section 7 Rights.
– The decision may also affect supervisors and non-statutory employees.
– The limitations imposed by the decision could extend to other employment agreements, handbook policies, and arbitration agreements.
– The NLRB’s decision may be applied retroactively.
– Employers should be cautious about language that limits employees’ Section 7 Rights in all employment agreements.
– The NLRB’s General Counsel is expected to issue guidance to employers in the near future.

https://www.kanekessler.com/firm-publications/nlrb-ends-permissible-use-of-broad-non-disparagement-and-confidentiality-provisions-in-severance-agreements/