A National Labor Relations Board says its earlier decision prohibiting employers from conditioning severance benefits on nondisparagement or nondisclosure agreements applies retroactively, and employers who enforce such clauses in old severance agreements can face unfair labor practice liability.
A recent memo from the general counsel of the National Labor Relations Board clarifies that even severance agreements signed before the NLRB’s Feb. 21 decision in the McLaren Macomb case are impacted. The March 22 memo makes clear the NLRB may prosecute and invalidate provisions in any old severance agreements that forced a departing worker to broadly waive his or her statutory rights.
The McLaren Macomb case involved severance agreements offered to furloughed hospital workers in Michigan that prohibited them from making statements that could disparage their employer and from disclosing the terms of the agreement itself to anyone except their spouse or financial adviser. Workers who violated the terms of the severance agreement faced monetary and injunctive sanctions.
In the Feb. 21 decision, the NLRB said employers cannot force departing workers to broadly waive their rights under the National Labor Relations Act as a condition of receiving severance pay or benefits.
The NLRB’s latest March 22 memo clarifies the retroactivity issue and provides guidance on the kinds of severance agreement provisions that could violate the Act if offered, maintained, or enforced, including confidentiality, nondisclosure, and nondisparagement, among others.
General Counsel Jennifer Abruzzo emphasized that lawful severance agreements are not banned, only those that have “overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees.”
“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,” Abruzzo wrote. “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.”
Nondisparagement clauses in legal severance agreements also must be very narrowly defined to statements that are “maliciously untrue” not the mere public criticism of an employer.
The memorandum also affirmed that the McLaren Macomb decision does not generally apply to severance agreements with supervisory employees. However, it may apply in narrow cases, such as when an HR supervisor is fired for refusing a directive to violate the National Labor Relations Act by having a worker sign an illegal severance agreement.
“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,” Abruzzo wrote.
