On February 21, 2023, the National Labor Relations Board (NLRB) issued its decision in a charge titled McLaren Macomb, which ruled that an employer violates Section 8(a)(1) of the National Labor Relations Act (NLRA) when it includes provisions in severance agreements that restrict or tend to interfere with workers’ organizing rights. Specifically, the NLRB reviewed an employers’ use of confidentiality and non-disparagement clauses and found such restrictions unlawful. The NLRB’s ruling affects employees in both unionized and non-unionized work environments.
What does this mean for employers?
There is a possibility that proffering a severance agreement to an employee with an overly broad or restrictive non-disparagement clause may be an unlawful act as of February 21, 2023.
The new NLRB decision held that non-disparagement clauses can violate the NLRA if they are overly broad or restrict employees from engaging in protected activity. For example, a non-disparagement clause that prohibits an employee from criticizing the employer’s labor practices or from discussing the terms of a settlement agreement with other employees or third parties could be deemed unlawful.
The NLRB also held that non-disparagement clauses must be narrowly tailored to serve a legitimate business purpose and not restrict employees’ rights under the NLRA. That means that employers cannot use non-disparagement clauses to prevent employees from engaging in protected concerted activity, such as discussing wages or working conditions with other employees or complaining about unfair labor practices.
Employers who use non-disparagement clauses in severance agreements need to be careful to ensure that the clauses comply with the NLRA. This means that employers should draft the clauses narrowly and clearly define the scope of prohibited conduct. Employers should also avoid using language that could be interpreted as restricting employees’ rights under the NRLA.
To avoid running afoul of the NLRA, employers should consult with legal counsel before using non-disparagement clauses and should review their existing agreements to ensure compliance with the law. Employers should also provide training to managers and other personnel who are involved in the hiring, termination, or other employment-related decisions to ensure that they understand employees’ rights under the NRLA and the limits on the use of non-disparagement clauses.
The recent NLRB decision on severance agreements has important implications for non-disparagement clauses. Employers need to be aware of these implications and ensure that their non-disparagement clauses comply with the NRLA to avoid penalties and legal challenges.
If you would like further clarification on this new guidance, please reach out to your contact at Mansour Gavin or one of our Labor and Employment attorneys.