National Labor Relations Board Decision Places Limits on Severance Agreements
On February 21, 2023, in McLaren Macomb, 372 NLRB No. 58, the National Labor Relations Board held that employers may not offer severance agreements to employees which require these employees “to broadly waive their rights under the National Labor Relations Act [Act].” The McLaren decision involved severance agreements offered to furloughed employees which prohibited them from making any disparaging statements against the employer and from disclosing the terms of the agreement itself. McLaren now places limits on the use of confidentiality, non-disclosure, and non-disparagement clauses that employers may include in severance agreements. The decision reverses prior NLRB precedent in 2020 which found that similar severance agreements were not unlawful by themselves.
While the Act applies to most private sector employers and the U.S. Postal Services, including those with a non-union workforce, the McLaren decision does not apply to employees who are excluded from the act’s coverage, such as managers and supervisors. Moreover, the decision makes clear that the “free speech” of employees under Section 7 of the Act requires that “employee critique of employer policy pursuant to the clear right under the act to publicize labor disputes is subject only to the requirement that employees’ communications not be so disloyal, reckless or maliciously untrue to lose the act’s protection.”
Based on the broad language of the McLaren decision, employers should review the language they use in severance and separation agreements and discuss with legal counsel whether that language should be modified, including those non-disparagement and confidentiality clauses found in pre-existing agreements.