Follow us on LinkedIn to see future News.
March 27, 2023
As we outlined in a previous article, the National Labor Relations Board (NLRB) recently held that an employer’s mere proffer to employees of a severance agreement containing broad confidentiality and non-disparagement provisions was unlawful because the provisions restrained or interfered with employees’ rights under Section 7 of the National Labor Relations Act (NLRA) to engage in concerted activity for mutual aid or protection. See 372 NLRB No. 58 (Feb. 21, 2023).
On March 22, 2023, Jennifer Abruzzo, Esquire, General Counsel for the NLRB, issued Memorandum GC 23-05 to all of the NLRB’s field offices to answer questions about the impact of the NLRB’s decision. Though the Memorandum does not carry the weight of law, it is instructive as to how the NLRB directors and officers will construe severance agreements going forward.
Severance Agreements Are Not Dead.
The Memorandum confirms that severance agreements are lawful when they seek an employee’s waiver of only the right to pursue employment claims that have arisen up to the date of the agreement and “do not have overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees.”
The NLRB’s Decision Also May Apply to Supervisors.
The NLRA generally does not apply to supervisors. However, the NLRA will protect a supervisor who is retaliated against for refusing to violate the NLRA at their employer’s directive – for example, the NLRA would protect a supervisor who is fired for refusing to proffer an unlawful severance agreement to an employee.
The NLRB’s Decision Is Retroactive.
An Unlawful Provision May Not Invalidate the Entire Severance Agreement.
The Memorandum confirms that NLRB field offices “generally make decisions based solely on the unlawful provisions and would seek to have those voided out as opposed to the entire agreement.”
Former Employees Are Entitled to Protection Under the NLRA.
The definition of “employee” in the NLRA is broad and includes “any employee, and shall not be limited to the employees of a particular employer.” In other words, Section 7 rights are not limited to discussions with coworkers and do not depend on the existence of an employment relationship. Former employees may share information about working conditions that constitutes both mutual aid and protection.
An Employee’s Request for Broad Confidentiality or Non-Disparagement Provisions Does Not Protect the Employer.
Section 7 rights cannot be waived, no matter who raises the issue.
Confidentiality and Non-Disparagement Provisions Still Can Be Lawful.
The Memorandum confirms the continued effectiveness of OM 07-27, which addresses “non-Board adjustments” – agreements between the parties that result in the withdrawal of a complaint filed with the NLRB. Accordingly, confidentiality clauses may prohibit an employee from disclosing the financial terms of the settlement to anyone other than the employee’s family, attorney, and financial advisor. In addition, narrowly tailored confidentiality clauses that “restrict the dissemination of proprietary or trade secret information for a period of time based on legitimate business justifications may be considered lawful.”
Furthermore, agreements that prohibit the employee from engaging in defamatory speech about the employer also are normally acceptable. The Memorandum describes defamatory speech as statements that are “maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity.”
A “Savings Clause” May Not Save the Employer.
Adding to agreements a disclaimer that no provisions are meant to interfere with or restrain an employee’s Section 7 rights would not necessarily cure overly broad provisions.
Confidentiality and Non-Disparagement Provisions Are Not the Only Provisions on Which the NLRB Is Keeping an Eye.
The Memorandum notes that, in addition to confidentiality and non-disparagement provisions, other provisions may implicate Section 7, including non-compete clauses, non-solicitation clauses, no-poaching clauses, broad liability releases that “go beyond the employer and/or may go beyond employment claims and matters as of the effective date of the agreement,” and cooperation clauses that affect an employee’s ability to refrain from action under Section 7.
This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
