Published March 1, 2023
The National Labor Relations Board (NLRB) recently issued its decision in McLaren Macomb that prohibits employers from offering employees severance agreements with nondisclosure and confidentiality provisions that broadly waive employees’ rights under the National Labor Relations Act (NLRA). 372 NLRB No. 58 (2023).
At issue in McLaren Macomb was a unionized teaching hospital’s severance agreement, presented to 11 permanently furloughed employees, which broadly prohibited the employees from making statements that could disparage or harm the image of the hospital and further prohibited employees from disclosing the terms of the severance agreement. The Board held that the nondisparagement and confidentiality provisions were unlawful based on the principle that terms of a severance agreement are unlawful if they have a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their NLRA Section 7 rights.
The Board’s decision overruled its two previous decisions issued under the prior administration—Baylor University Medical Center, 369 NLRB No. 43 (2020), and IGT d/b/a International Game Technology, 370 NLRB No. 50 (2020). The former precedential cases focused on the circumstances under which a severance agreement was presented to employees and permitted voluntary agreements that pertained exclusively to post-employment activities that had no impact on terms and conditions of employment.
The Board’s change in course represents a return to the broad scope and wide protections afforded to employees under Section 7 of the NLRA. The Board stated that discussing terms and conditions of employment with coworkers lies at the heart of protected NLRA Section 7 activity, and the Board reaffirmed that these rights extend to both current and former employees. Going forward, even the “mere proffer” of an agreement that unlawfully conditions receipt of severance benefits on the forfeiture of statutory rights constitutes an unfair labor practice in violation of the NLRA.
Employers should review and analyze their severance agreements and other agreements with employees to determine whether they should revise such agreements in light of this decision.
The full McLaren Macomb decision can be found here.
If you would like to discuss what impact this ruling could have on your company or would like an employment attorney to review a severance agreement, please contact any member of Ryan Swanson’s Employment Rights, Benefits & Labor group.