Guest Commentary By Paul D. Satterwhite, Spencer Fane
In what is likely to be seen as a landmark decision, the National Labor Relations Board issued a decision in McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023) that will immediately change the legal landscape for severance agreements in the United States. Te NLRB overturned two Trump-era cases and held that severance agreements offered to nonsupervisory employees are unlawful if they contain broad nondisparagement or confidentiality provisions that restrict a worker’s (or former worker’s) Section 7 rights to discuss the terms and conditions of their employment or to speak negatively regarding their former employer. Under McLaren, the mere offer of a severance agreement, including a broad confidentiality or nondisparagement provision, can now be found to be a violation of the National Labor Relations Act.
Not So Fast, My Friend. NRLB weighs in
on non-disparagement,
confidentiality provisions in severance agreements
Te McLaren decision will significantly affect most employers’ standard practice of including broad confidentiality and nondisparagement provisions in severance agreements. Employers should familiarize themselves with the NLRB’s new standard and work with counsel to determine necessary modifications to their severance agreements and when the McLaren standard will apply.
HOW DID WE GET HERE? Te McLaren case involved a unionized hospital that offered a severance agreement to 11 bargaining unit employees. Te severance agreement in question contained a relatively standard confidentiality provision that prohibited the employees from disclosing the terms of the severance agreement to third parties and a nondisparagement provision prohibiting statements that “could disparage or harm the image of ” the employer and its related entities/employees.
Te employees filed Unfair Labor Practice charges against the hospital, asserting that the prohibitions in the severance agreement were too broad and, as a result, unreasonably restricted their exercise of their Section 7 rights to engage in concerted protected activity by discussing the terms and conditions of their employment with others. In finding for the employees, the NLRB reversed its recent decisions in Baylor University Medical Center, 369 NLRB No. 43
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