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NLRB rules ‘overly broad’ severance agreements violate labor laws

On Behalf of | Apr 26, 2023 | Employee Rights

In February, the National Labor Relations Board (NLRB) ruled employers offering severance agreements containing broad non-disparagement and confidentiality clauses violate the National Labor Relations Act (NLRA). The McLaren Macomb decision is seen by many as a significant victory for employees.

The Board says offering employees severance agreements requiring them to give up their rights broadly is illegal under Section 8(a)(1) of the NLRA. The Board says even the mere offer of an agreement of this nature is a violation, regardless of whether the employee accepts the terms.

NLRB offers clarifications

NLRB General Counsel Jennifer Abruzzo said in a March 22, 2023, memo that the ruling does not ban all severance agreements. But she stated that some language commonly used in non-disparagement and confidentiality clauses for decades may be considered unlawful.

These agreements typically seek to prevent employees from engaging with the NLRB, unions, courts, legislatures, the media and other third parties – rights protected under Section 7 of the NLRA. While the Trump-era NLRB favored giving employers wider latitude in these agreements, the Board appears to be returning to its pre-2020 guidance.

Key takeaways from the ruling

Employers are still allowed to offer severance agreements providing they only address specific issues related to employment and do not hinder employees’ NLRA rights, including the right to speak publicly about the workplace and the employer. Other notable matters addressed by Abruzzo include:

  • The NLRB may address other documents that violate Section 7 protections, including noncompete, non-solicitation and no-poaching agreements.
  • The McLaren Macomb ruling is retroactive to all severance agreements before the February ruling.
  • Employers that retaliate against supervisors who refuse to offer unlawful severance agreements can be found in violation of the law, even though supervisors are typically not covered under the NLRA.
  • Employees cannot be forced to waive their Section 7 rights.

If offered a severance agreement, it is advisable to seek experienced legal guidance in light of the NLRB ruling. That’s also true if you previously accepted one of these restrictive documents in order to receive a severance package.

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