NLRB Reinstates Long-Standing Precedent on Severance Agreements

In a February 2023 decision, the NLRB overruled two Trump-era rulings that permitted employers to offer employees severance agreements that require employees to broadly waive their rights under Section 7 of the NLRA, and had also limited the Board’s review of severance agreements to the circumstances under which the severance agreement was presented to the employees. In the decision in McLaren Macomb, the NLRB returned to prior precedent of reviewing the language of the proffered severance agreement to determine whether the language would have a reasonable tendency to interfere with, restrain, or coerce employees’ exercise of their Section 7 rights.

In McLaren Macomb, management offered 11 furloughed unionized employees severance agreements that reflected differing severance amounts, broadly prohibited the employees from making statements that could disparage the employer, and also prohibited them from disclosing the terms of the agreement. The Board found that the non-disparagement and confidentiality provisions interfered with, restrained, or coerced employees’ exercise of Section 7 rights. The Board explained that the ability of employees to make public statements about the workplace is central to the exercise of employee rights under the NLRA. As written, the non-disparagement provision would unlawfully chill any discussion relating to any labor issue, dispute or term and condition of employment. The Board thus reaffirmed that employee’s Section 7 rights continue even after the employment relationship has ended. The Board further found that the confidentiality provision as written would unlawfully coerce an employee from filing a charge with the NLRB or assisting in an investigation, and would prevent employees from discussing the agreement with the Union and also with former coworkers who could end up in the same predicament.

In reversing the Trump-era rulings, the Board noted that the prior decisions ignored well-settled law that employees may not waive their rights under the NLRA. McLaren Macomb reinstates a means to protect employees’ Section 7 rights regardless of Employer motive. While the decision does not ban all confidentiality and disparagement clauses, Employers must work harder to carefully tailor the language in severance agreements to avoid any interference with employees’ Section 7 rights. For more information on this decision, please contact your labor law counsel.