Goodbye Secret Settlements? National Labor Relations Board Says No to Broad Confidentiality and Non-Disparagement in Severance Agreements

On February 21, 2023, the National Labor Relations Board decided in McLaren Macomb that Employers violate federal labor law if they offer severance agreements that include broad confidentiality clauses and/or non-disparagement clauses.

Section 7 of the National Labor Relations Act protects workers’ right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” This language gives current and former employees the right to communicate with each other, and with the public, to advance their collective interests as employees. These Section 7 rights apply to both unionized and non-unionized employees.

In McLaren Macomb the National Labor Relations Board ruled that Employers may not offer severance agreements to an employee that broadly prevent an employee from either:

(1) talking to other workers, or the general public, about the existence and/or terms of the severance agreement; or

(2) making statements to other workers, or the general public, that are critical of the
employer.

In fact, the NLRB held that the mere offering of a severance agreement to an employee with these terms is a violation of federal labor law. The NLRB reasoned that these terms tend to interfere with workers’ Section 7 rights, including to communicate with each other to advance their collective interests. The Board reasoned that this was particularly so in the context of a severance agreement where employees often feel that they must give up their rights in order to benefit from the agreement.

If you have any questions regarding the legality of a severance agreement offered to you, or if you are interested in filing a complaint for potential violations of your rights under the NLRA, please contact a Levy Ratner attorney here.