Based upon the NLRB’s recent decision in McLaren Macomb (February 23, 2023) and related General Counsel Memorandum 23-05 (March 22, 2023), employers (whether unionized or not) should review severance and other employment agreements containing confidentiality, non-disclosure, or non-disparagement provisions to ensure compliance with the Board’s restrictive new standards.
In McLaren Macomb, the NLRB examined severance agreements offered to 11 employees who were permanently furloughed from a Michigan hospital. The NLRB concluded that offering employees severance agreements that contained broad confidentiality, non-disclosure, and non-disparagement provisions unlawfully interfered with their Section 7 rights under the National Labor Relations Act (NLRA). The Board reasoned that such provisions could limit employees’ rights to communicate with other employees, union representatives, and/or NLRB agents regarding workplace issues and labor disputes, rights which are central to the protections of the NLRA.
In General Counsel Memorandum 23-05, NLRB General Counsel Abruzzo provided additional guidance on the McLaren Macomb decision. The General Counsel’s memo confirmed that whether an employee actually signs a severance agreement containing overly broad confidentiality and/or non-disparagement provisions is irrelevant. The employer violates the NLRA simply by presenting employees with such an agreement. In addition, the memo clarified that the McLaren Macomb decision is retroactive and thus applies to agreements presented to employees before February 2023, although such actions are normally subject to a 6-month statute of limitations. The memo also states that the McLaren Macomb standard is not limited to provisions contained in severance agreements, but rather applies to any employer agreement or communication that implicates employees’ Section 7 rights. These would likely include free-standing confidentiality and non-disclosure agreements and could even include non-compete or non-solicit provisions in certain scenarios.
On the heels of this recent NLRB activity, employers are well-advised to work with employment counsel to review separation agreements, as well as other free-standing agreements and communications with employees. Employers should carefully consider whether confidentiality, non-disclosure, or non-disparagement provisions are truly necessary to protect their business interests. If deemed necessary, they will need to be extremely narrowly tailored to meet the NLRB’s stringent new standard. Your partners at Lake Effect are ready to help you with this important review process.
Lake Effect is here to answer your questions about compliance with federal, state, and local laws as they related to all employment agreements. We continue to monitor important legal and HR developments that affect employers. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at email@example.com or 1-844-333-5253.