NLRB Bans Confidentiality/Non Disparagement in Severance Agreements

 Posted on May 19, 2023 in Firm News

On February 21, 2023, the National Relations Labor Board (the "Board" or "NLRB") issued a decision in McLaren Macomb, which held severance agreements containing broad confidentiality and non-disparagement provisions infringe on the rights of employees covered by the National Labor Relations Act (the "Act").

This decision reverses the Board's previous decisions in Baylor University Medical Center and IGT d/b/a International Game Technology, both issued in 2020. These earlier cases found that the inclusion of confidentiality/non-disparagement provisions within severance agreements was not, on its own, a violation of the Act.

In McLaren Macomb, the Board reversed course and held employers cannot require individual employees to choose between receiving benefits and exercising certain rights under the National Labor Relations Act. The Act makes it an unfair labor practice for an employer to interfere, restrain, or coerce employees in the exercise of their rights. As such, the Board reasoned in McLaren Macomb that confidentiality/non-disparagement provisions would be improper since it may dissuade employees from filing unfair labor practice charges, offering assistance to other employees, and scaring off employees from aiding the Board with any investigations.

Moving forward, the NLRB could review and invalidate confidentiality and non-disparagement provisions in severance agreements that violate the Act. However, employees should be mindful that the NLRB's jurisdiction is generally limited to non-management employees.

Please contact Freedman Law, LLC, if you have questions regarding your rights in the workplace.