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NLRB Restricts Confidentiality and Non-Disparagement Clauses in Severance Agreements

On February 21, 2023, the National Labor Relations Board (NLRB or Board) issued a decision in McLaren Macomb which impacts certain confidentiality and non-disparagement clauses in severance agreements for both union and non-union employers.

The decision reinstates the NLRB’s pre-2020 standard restricting certain confidentiality and non-disparagement clauses in severance agreements that contain provisions that would restrict employees in exercising their NLRA rights. In making their decision, the Board’s central focus was the language of the agreements and whether they broadly required employees to waive their rights or if the requirements of the agreement would prohibit employees from participating in, or cooperating with, the Board during investigations or legal proceedings related to unfair labor practices.

Next Steps for Employers

This decision is not considered retroactive as the Board did not indicate how, or if, they intend to address severance agreements that were entered into prior to the decision. However, for any agreements entered into on or after February 21, 2023, employers should review and adjust the language in their severance agreements to ensure that any language contained therein does not make payment of severance contingent upon the employee waiving their rights, or what may be construed as their rights, under the NLRA including but not limited to, requiring the fact and contents of the agreement, including the amount of severance to be kept confidential or prohibiting the employee from disparaging the employer, along with its officers, directors, employees, agents, and representatives.

It is recommended that employers seek the assistance of legal counsel in drafting of severance agreements to ensure that their scope cannot be considered overly broad and contains reasonable safeguards such as safe harbor language.

Of note, the NLRA generally does not apply to supervisory employees, as a result, employers may consider whether use of said clauses in severance agreements will remain in place for supervisors while paying close attention to ensure any language in the agreements do not violate any other federal, state or local laws.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.