Labor & Employment Blog

If you, like most employers, have included non-disparagement or confidentiality provisions in your severance and settlement agreements, you will be interested in a recent decision from the National Labor Relations Board (“NLRB”). On February 21, 2023, in a 4-1 decision the NLRB held an employer violates Section 8(a)(1) of the National Labor Relations Act (“NLRA”) when it offers a severance agreement with non-disparagement and confidentiality provisions that would restrict employees’ exercise of their NLRA rights. While some employers mistakenly believe the NLRA only applies to unionized employees, the NLRA covers most employees in the private sector, regardless of whether the workplace is unionized. However, the NLRA does not apply to (and the below NLRB decision does not affect) independent contractors, government employees, agricultural laborers, and supervisors (with limited exceptions), as those workers are not “employees” within the meaning of the NLRA.

The primary issue before the NLRB was whether the employer violated Section 8(a)(1) of the NLRA by offering a severance agreement that prohibited employees from making statements that could disparage or harm the image of the employer. The severance agreement also prohibited the employees from disclosing the terms of the severance agreements.

The NLRB concluded the non-disparagement and confidentiality provisions at issue interfered with, restrained, or coerced employees’ exercise of their Section 7 rights under the NLRA. Because the severance agreements conditioned the receipt of severance benefits on the employees’ acceptance of those unlawful provisions, the employer’s offer of the severance agreements to employees also violated Section 8(a)(1) of the NLRA.  

The NLRB reasoned that public statements by employees about the workplace are central to the exercise of employee rights under the NLRA. According to the NLRB, the proscription would reasonably tend to prevent the employee from filing an unfair labor practice charge or assisting the NLRB’s investigation into the employer's use of the severance agreement. 

There is still much left unanswered by this decision. We expect the NLRB General Counsel to issue guidance on what is and is not acceptable and we are continuing to monitor this matter. The NLRB opinion in McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, International Union (OPEIU), AFL-CIO, Case 07-CA-263041 (“McLaren Macomb”) can be found here.

Chamberlain Hrdlicka’s Labor & Employment Group is available to answer any questions and assist with revising your separation and settlement agreements. Feel free to forward the Labor & Employment Alerts to others who might be interested. If you have questions, please send an e-mail or call.