NLRB Rules on Non-Disparagement and Confidentiality Clauses in Severance Agreements

On February 21, 2023, the National Labor Relations Board (NLRB) issued its decision in the matter of McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, International Union (OPEIU), AFL–CIO. ?In McLaren Macomb, the NLRB reviewed specific language in severance agreements that had been received by a group of bargaining unit employees in connection with a permanent furlough.?The NLRB found that the non-disparagement and confidentiality clauses within the severance agreement violated the employees’ rights under sections 7 and 8(a)(1) of the National Labor Relations Act (NLRA).

Under Section 7 of the NLRA, employees have the right to "self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." ?Employees also have the right not to participate in these types of activities.?Under Section 8(a)(1), any interference with, restrain of, or coercion of employees in the exercise of the rights guaranteed under Section 7 constitutes an unfair labor practice.

In reviewing the Confidentiality and Non-Disclosure clauses in McLaren Macomb, the NLRB found that the clauses were overly broad and therefore constituted “unlawfully coercive” conduct by the employer under Section 8(a)(1) of the NLRA.?In rendering its decision, the NLRB overruled two 2020 decisions issued by the Agency itself, and returned to the NLRB’s long-standing position that any provision of a severance agreement that has a “reasonable tendency to interfere with, restrain, or coerce the exercise of employee rights under Section 7 of the NLRA” is a violation of Section 8(a)(1) of the NLRA.

The NLRB found that the employer failed to clearly define “disparagement” in the severance agreement’s non-disparagement clause.?As a result, the NLRB concluded that the language of the clause was overly broad and, therefore, constituted a comprehensive ban on the employees’ conduct regarding any labor issue, dispute, or terms of employment.?The NLRB also found that the non-disparagement clause not only benefited the employer, but also benefited the employer’s parents, affiliated entities, officers, directors, employees, agents, and representatives.?In addition, the NLRB found that the lack of a time limit within the clauses prevented the furloughed employees from raising or assisting with complaints about the employer with their former co-workers, the Union, the NLRB, any other government agency, the media (including social media) and nearly anyone else.?The NLRB also found the Confidentiality clause overbroad in its prohibition on communications.?

As a result of this most recent decision by the NLRB, employers should review the language used in any severance agreements as it relates to non-disparagement or confidentiality to ensure that the language is not overly broad and that the agreements are in compliance with the NLRA.?Employers with concerns regarding their severance agreements, should consult an attorney for further guidance.

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