SCMP Breaking News - Labor & Employment
Year 8, Vol. 2 - February 27, 2023
In a decision issued on February 21, 2023, the National Labor Relations Board (“NLRB”) held that confidentiality and non-disparagement provisions in severance agreements violate Section 8(a)(1) of the National Labor Relations Act (“NLRA”).
In McLaren Macomb, 372 NLRB No. 58 (2023), the Board examined whether the employer violated Section 8(a)(1) of the NLRA by offering severance agreements to a group of permanently furloughed employees that contained provisions prohibiting the exiting employees from: (i) making statements that could disparage or harm the image of the employer; and (ii) disclosing the terms of their severance agreements. The NLRB determined that, by conditioning receipt of severance benefits on acceptance of the non-disparagement and confidentiality provisions, the employer violated Section 8(a)(1) of the Act merely by proffering the severance agreements to the employees.
In doing so, the Board determined that “a severance agreement is unlawful if its terms have a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights, and that employers’ proffer of such agreements to employees is unlawful.”
More specifically, the Board found that the non-disparagement provision at issue violated employees’ Section 7 rights because “[p]ublic statements by employees about the workplace are central to the exercise of employee rights under the Act.”
Similarly, the Board found that the confidentiality provision at issue violated employees’ Section 7 rights because it precluded employees from “disclosing even the existence of an unlawful provision contained in the agreement”, thereby prohibiting employees from discussing the severance agreement with former co-workers who may receive similar agreements, as well as union representatives or other employees seeking to organize and coerced employees from filing unfair labor practice charges or assisting the NLRB in an investigation.
Who does the holding in McLaren Macomb apply to?
The holding in McLaren Macomb applies to all nonmanagerial unionized and non-unionized employees. However, it does not apply to federal, state and local government agencies, railways, airlines or to supervisors and managers, independent contractors, agricultural or domestic workers.
Does the McLaren Macomb holding apply to other provisions in severance agreements?
The NLRB’s decision in McLaren Macomb applies only to non-disparagement and confidentiality provisions. Importantly, the NLRB refused to determine that the non-disclosure provision in the severance agreement relating to the employer’s privileged and proprietary information was unlawful under section 8(a)(1) of the Act.
When does this ruling go into effect?
The ruling went into effect immediately and may even be applied retroactively with regards to an alleged labor violation pertaining to a severance agreement that was signed or enforced within the past six (6) months.
What should employers do?
Employers should consider this new decision when drafting and utilizing severance and other employment agreements. SCMP will continue to monitor developments regarding this important Board decision and will provide updates in our newsletter as new information becomes available.
If you have any additional questions, contact us at (787) 945-0380
Because of the general nature of this newsletter, nothing herein should be construed as legal advice or a legal opinion. SCMP Breaking News and all its content is property of Silva-Cofresí, Manzano & Padró, LLC
Comments