Last week, the NLRB issued a landmark decision in McLaren Macomb that is already shaking up how private employers (both unionized and non-unionized) should consider severance agreements.
My colleagues have the full recap of the decision over at our sister blog, Employment Law Letter, from Friday and I highly recommend reading that first.
The key takeaway from the decision is that the Board held that severance agreements containing broad non-disparagement and confidentiality provisions violate the NLRA because they interfere with employees’ Section 7 rights (which provide that employees may engage in concerted activity and discussion terms and conditions of their employment with others).
As my colleagues point out, this decision does not apply to managerial employees, supervisors, public sector employees or certain other excluded classes including public-sector employees; it only applies to “employees” as defined by the NLRA. It also does not apply retroactively and, importantly, it does not apply to confidentiality provisions where the company is protecting its “confidential” business information such as trade secrets, only to confidentiality of the agreement provisions.
But the decision leaves a lot of questions unanswered, putting employers in a challenging position until more decisions come out or the case gets tweaked on a (likely) appeal.
There are several options for employers to consider. Here are a few that I’ve seen under discussion:
First, employers can simply delete these provisions from the severance agreement for applicable employees. This is the safest path forward.
Second, employers might consider a disclaimer that the agreement does not prohibit the employee from engaging in activity protected by the NLRA. But the Board has previously questioned their use when employers have put these disclaimers in employee handbooks.
Third, employers might want to consider “narrowly tailored” provisions on confidentiality and non-disparagement. But it’s unclear what that might look like.
Fourth, employers might consider the use of saving clauses to sever the offending clause from the agreement. But again, the NLRB has suggested that just offering this type of agreement might violate the NLRA.
There are other options as well. Each of these should be discussed robustly with your counsel as the risk factors and decision trees may differ by industry, company size, and situation.
If you want to read even more about this, Reed Smith did a terrific FAQ on the subject that I highly recommend.