The National Labor Relations Board (NLRB) ruled in February that the confidentiality and non-disparagement clauses of an agreement offered to a group of furloughed employees by a Michigan hospital improperly required employees to broadly give up their rights under the National Labor Relations Act (NLRA).

The decision in McLaren Macomb and Local 40 (McLaren) reinstated the pre-Trump era NLRB standard for severance agreements. That means that severance agreements – in both unionized and non-union workplaces – could once again be deemed unlawful if they could be construed to broadly restrict a worker’s rights to speak about the agreement or otherwise talk negatively about their former employer, among other things.

Companies that regularly include confidentiality and non-disparagement provisions in their severance/release of claims agreements with departing employees should ask their outside counsel to review and update the standard agreements based on the McLaren decision.

The NLRA

Employers may be forgiven for believing that the NLRA doesn’t apply to their non-union companies.

For decades, activities by the NLRB generally applied to unions, organizing drives and strikes. But buried within the NLRA is language that may be applied to non-unionized workplaces.

Section 7 of the NLRA protects the rights of employees – in both union and non-union settings – to “self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.” Section 8(a)(1) makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in [Section 7].”

Given the Section 7 language cited above, it is important for employers to remember that the NLRA applies to non-management employees at most private employers. It is also worth noting that the NLRB takes a strict approach to defining who is a supervisor; a job titles alone will not make someone a “supervisor.”

Navigating Severance Agreements Post-McLaren

The NLRB’s General Counsel issued a memorandum (GC-23-05) to provide additional guidance on the McLaren decision.  The guidance is presented in a question-and-answer format addressing many of the concerns employers may have about using these agreements in the future. One important consideration is that this decision may be applied retroactively, thus invalidating existing agreements with unlawful provisions.

While the guidance does not offer model language, it strongly suggests that “narrowly tailored” confidentiality and non-disparagement severance agreement language “may” still be lawful in certain circumstances.

The guidance also draws attention to the fact that “overly broad provisions in any employee communication” would be “unlawful if not narrowly tailored.” This statement in the guidance suggests that it may apply to many other employment documents beyond severance agreements potentially including offer letters, employment agreements, and even components of handbooks and policy documents.

Given the complexity of this issue, employer may want to reach out to outside labor/employment law counsel to discuss the potential use of and/or the enforceability of existing agreements.

AIM members with questions about this or any other human resources issue may call the AIM Employer Hotline at 1-800-470-6277.