Monday, February 27, 2023

NLRB takes aim at confidentiality and nondisparagement clauses in separation agreements

On February 21, 2023, the NLRB issued its opinion in McLaren Macomb and corresponding press release, Board Rules that Employers May Not Offer Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights.

The case involved the following provisions in separation agreements offered to 11 permanently furloughed bargaining unit employees:

6. Confidentiality Agreement. The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction. 

7. Non-Disclosure. At all times hereafter, the Employee promises and agrees not to disclose in- formation, knowledge or materials of a confidential, privileged, or proprietary nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment. At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives.
Uhhhh, you mean totally normal, standard boilerplate, confidentiality and nondisclosure/
Not official use.

nondisparagement provisions that you'd find it just about any separation agreement? Yes, those. 

Welp, the NLRB takes issue with these clauses, concluding:
[T]he nondisparagement and confidentiality provisions interfere with, restrain, or coerce employees’ exercise of Section 7 rights. Because the agreement conditioned the receipt of severance benefits on the employees’ acceptance of those unlawful provi- sions, we find that the Respondent’s proffer of the agreement to employees violated Section 8(a)(1) of the Act.
In layman's terms, the employees were offered benefits in exchange for giving up their rights to discuss the terms and conditions of employment with their former colleagues and to publicly protest the conditions. The NLRB has concluded that even offering such a deal is a violation of the NLRA. 

Should you abandon such boilerplate clauses? Not so fast! First, not all workers are covered by the NLRA (state employees, supervisors, independent contractors, etc.). Second, the courts might have something to say about this ruling. Third, you can draft the clauses to carve out certain protected activity (which substantially reduces the effectiveness of the clauses, but may save an employer from the NLRB's wrath).  

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