Recently, the National Labor Relations Board (NLRB) ruled that specific non-disparagement and confidentiality clauses in severance agreements could violate the rights of both union and non-union employees.
The NLRB held that these clauses prevent employees from engaging in protected activity under Section 7 of the National Labor Relations Act (NLRA). Employers and employees must take note because these provisions have become widespread in standard employment agreements.
The ruling applies to all union and non-union employees who are not supervisors. This means employers will need to carefully update their severance agreements to make sure they are in compliance.
The NLRB made this ruling in McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, International Union (OPEIU), AFL–CIO, Case 07-CA-263041. The events that led to the case began in March 2020, when an employer temporarily furloughed 11 bargaining unit employees as nonessential.
The employer decided to permanently furlough those employees in June 2020. When it did this, it forced the employees to sign a non-disparagement clause alongside a confidentiality agreement. The agreements stated that employees would incur severe monetary and injunctive sanctions if they breached any of the clauses.
The employer did all of this without informing the employees’ union. Consequently, the administrative judge ruled that the employer violated Sections 8(a)(5) and 8(a)(1) of the NLRA by communicating directly with the employees and leaving the union out of the discussion.
The NLRB reached this ruling by relying on the precedent established by Baylor University Medical Center, 369 NLRB No. 43 (2020).
In this case, the NLRB ruled that since the severance agreement was not mandatory, pertained solely to post-employment activities, and did not impact present conditions of employment, the employer was not in violation of the NLRA. Additionally, it did not find that the agreement infringed on the rights defined in Section 7.
Another important case informing the NLRB’s decision was IGT d/b/a International Game Technology, 370 NLRB No. 50 (2020). This case saw the NLRB dismiss an allegation that an employer had an illegal non-disparagement provision in its severance agreement. The NLRB ruled that signing the agreement was voluntary.
According to the NLRB, the employer did not violate the law by having that provision in its severance agreement because coercion was not a factor.
McLaren Macomb: Non-Disparagement
In deciding McLaren Macomb, the NLRB found the non-disparagement clause to be unlawful because public statements made by employees in regard to their workplace are intimately bound to the NLRB’s definition of employee rights.
In issuing the ruling, the NLRB noted that if employees adhered to this provision, they would be unable to assist the NLRB with any investigations or file unfair labor practices charges against their employers in the future. The NLRB also held that the clause was unlawful because it pertained to entities associated with the employer as well.
McLaren Macomb: Confidentiality
The NLRB also found the confidentiality clause to be in violation of the law because it prohibited former employees from discussing the agreement’s provisions with any third party. On its face, this could technically prevent an employee from assisting with an investigation or filing an unfair labor practices charge against their former employer.
Contact NJ Employment Lawyers, LLC for Representation
If you are experiencing violations of employment law in New Jersey, including unacceptable non-disparagement and confidentiality clauses, contact NJ Employment Lawyers today for a consultation.
We have a compassionate approach and will take the time to examine your issue from every angle in order to determine whether the case is viable.