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NLRB Rules Against Overly Broad Severance Agreements

In McLaren Macomb, 372 N.L.R.B. No. 58 (2023), the NLRB held that overly broad non-disclosure and non-disparagement provisions in severance agreements violate Section 8(a)(1) of the NLRA. The Board overruled prior holdings by the Trump-NLRB in Baylor University Medical Center and IGT d/b/a International Game Technology and returned to its pre-2020 precedent, which held that a severance agreement is unlawful on its face if its language restricts employees’ exercise of their NLRA rights to join together to improve their workplace.

The Board in McLaren Macomb concluded that the non-disparagement provision substantially interfered with employees’ Section 7 rights because its expansive language would prohibit employees from making statements critiquing their terms and conditions of employment and from publicizing ongoing labor disputes or unfair labor practice violations. This “comprehensive ban” runs counter to an employee’s right under the NLRA to publicize labor disputes, subject only to the requirement that the statements not be so disloyal, reckless, or maliciously untrue as to lose the Act's protection. The Board found this was a “sweepingly broad bar that has a clear chilling tendency on the exercise of Section 7 rights by the subject employee” because it would preclude employees from raising complaints and cooperating with Board investigations pertaining to future labor disputes that could arise.

The Board further held that the severance agreement’s confidentiality provision violated the NLRA because it precluded the employee from disclosing the terms of the agreement to any third-party, even as part of an unfair labor practice investigation or charge. The confidentiality provision also unlawfully prohibited the employee from discussing the terms of the agreement with his former coworkers and with his union or union representatives.

An employer’s mere offer of a severance agreement with overly broad non-disparagement and non-disclosure provisions is an 8(a)(1) violation, regardless of whether the employee signs it. Because both the non-disparagement and confidentiality provisions effectively forfeit an employee’s rights under the NLRA and the employer conditions severance benefits on agreement to those provisions, the agreement itself has a reasonable tendency to interfere with, restrain or coerce the exercise of an employee’s Section 7 rights, “unless it is narrowly tailored to respect the range of those rights.”

SSDS is happy to assist employees and labor unions in negotiating severance agreements. Please contact us here.

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