My March 7, 2023, blog addresses the National Labor Relations Board’s recent fascination with confidentiality, non-disclosure, and non-disparagement provisions in separation agreements. Well, there’s more…
Are severance agreements now banned?
No. “Lawful severance agreements may continue to be proffered, maintained, and enforced if they do not have overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees. This includes the rights of employees to extend those efforts to channels outside the immediate employee-employer relationship, such as through accessing the Board, their union, judicial or administrative or legislative forums, the media or other third parties.”
Why should the circumstances surrounding the proffer not necessarily matter?
Because “an employer can have no legitimate interest in maintaining a facially unlawful provision in a severance agreement, much less an interest that somehow outweighs the Section 7 rights of employees.” Remember, Section 7 generally gives all non-supervisory employees to right to engage in protected concerted activity.
What if an employee does not sign the severance agreement?
That and $8.00 will buy you a fancy cup of coffee. In other words, it doesn’t matter.
Are severance agreements issued to supervisors beyond the scope of this decision?
The GC’s answer to this one is scary: “While supervisors are generally not protected by the Act, under Parker-Robb Chevrolet, 6 the Act does protect a supervisor who is retaliated against, such as being fired, because they are refusing to act on their employer’s behalf in committing an unfair labor practice against employees, in other words, they are refusing to violate the NLRA per their employer’s directives. So, not only would it be violative for an employer to retaliate against a supervisor who refuses to proffer an unlawfully overbroad severance agreement, but I believe that an employer who proffers a severance agreement to a supervisor in connection with Parker-Robb Chevrolet-related conduct, such as preventing the supervisor from participating in a Board proceeding, could also be unlawful.” So much for an easy way out.
Does the decision have retroactive effect, such that it may invalidate agreements entered into prior to February 21, 2023, or would a violation only be considered if an employer attempts to enforce a previously-entered into agreement?
In a word, yes (probably).
Would the entire severance agreement be null and void if there is just one overbroad provision?
Maybe not. But it’s a significant risk.
Why are former employees entitled to the same protections under the NLRA as current employees?
In the GC’s words: “Section 7 rights are not limited to discussions with coworkers, as they do not depend on the existence of an employment relationship between the employee and the employer. In addition, former employees can play an important role in providing evidence to the NLRB and otherwise sharing information about the working conditions they experienced, in a way that constitutes both mutual aid and protection.”
What if employees themselves request broad confidentiality and/or non-disparagement clauses?
It doesn’t matter. If the provisions are invalid, that’s the end of the story.
Can a confidentiality provision in a separation agreement ever be lawful?
Maybe. “Confidentiality clauses that are narrowly-tailored to restrict the dissemination of proprietary or trade secret information for a period of time based on legitimate business justifications may be considered lawful. However, confidentiality clauses that have a chilling effect that precludes employees from assisting others about workplace issues and/or from communicating with the Agency, a union, legal forums, the media or other third parties are unlawful.”
Can a non-disparagement provision in a separation agreement ever be lawful?
Maybe. But likely only if it’s limited to “maliciously untrue” statements.
Would a “savings clause” or disclaimer save overbroad provisions in a separation agreement?
Probably not. It’s generally not going to be enough to say, “To the extent any provision of this agreement is declared invalid or unenforceable, the remaining provisions will still be effective.” So, including “overbroad” confidentiality, non-disclosure, and/or non-disparagement provisions could result in the entire agreement being unenforceable (including the general release language, which is the key reason to offer a separation agreement in the first place). The GC wants the Board to provide a model “savings clause,” but it’s not going to be pretty. You will have to point out employees’ rights to unionize, etc.
Okay. What now? Well, this is a risk-benefit situation, like many employment law issues. Unionized employers are subject to significant liability if they include provisions struck down in the McLaren Macomb decision. Non-union employers have less risk, but still could get caught up in this mess. Hopefully, more guidance is forthcoming.