Severance Agreements
On February 21, 2023, the National Labor Relations Board (“NLRB”) issued a ruling in McLaren Macomb, 372 NLRB No. 58 (2023) that overly broad employee severance agreements that prohibit the employee from disclosing the terms of the severance agreement or from making disparaging statement about the employer may constitute an unfair labor practice under the National Labor Relations Act (“NLRA”).
The NLRA provides that employees shall have the right to self-organization, to join labor organizations, and to collectively bargain. An effort by an employer to interfere with employees in the exercise of their NLRA rights is considered an unfair labor practice.
The employer’s severance agreement in McLaren Macomb contained two provisions that the NLRB ruled were NLRA unfair labor practices. The first provision was a confidentiality provision that required the employee to agree to keep the terms of the severance agreement confidential except to family, accountants and lawyers. The other provision was a non-disparagement agreement that prohibited the employee from making any statements to other employees or the public which could disparage or harm the employer.
In its decision, the NLRB found that both the confidentiality and non-disparagement clauses were not narrowly tailored to matters regarding past employment nor did either have a limited period of enforcement. Furthermore, the NLRB found that the non-disparagement provision did not include a definition of the term “disparagement”. For these reasons, the NLRB found that both the confidentiality and non-disparagement provisions impermissibly asked the employee to choose between receiving severance benefits and exercising their NLRA rights.
Severance Agreements should be carefully drafted and reviewed to ensure they are enforceable and do not constitute unfair labor practices.
The attorneys of Supinka & Supinka, PC are experienced in drafting and in reviewing severance agreements. Please contact us today at 724-349-6768 to arrange a consultation.