In exchange for providing an employee with severance or separation pay, employers commonly require that an employee not disparage the company after the employee’s exit and that the employee keep the terms of the agreement confidential. If an employee speaks badly about the company despite the existence of a nondisparagement clause or tells others about how much severance he or she received, the employee exposes him or herself to damages—including potentially the severance or separation pay itself.
The McLaren Decision and the National Labor Relations Act
While courts have generally, in recent years, held nondisparagement and confidentiality clauses to be enforceable, a recent National Labor Relations Board (“NLRB”) decision determined that such clauses may violate Section 7 of the National Labor Relations Act (“NLRA”).
Section 7 of the NLRA generally guarantees workers the right to engage in “concerted activity,” including discussing wages, expressing concerns about workplace conditions or policies, or opposing unlawful conduct. In McLaren Macomb, the NLRB held that broad nondisparagement and confidentiality provisions unlawfully infringe on these important rights and are therefore unenforceable.
What Types of Workers Does this Decision Impact?
Importantly, because the NLRA protects union and nonunion workers alike, the decision applies to the majority of workers in the United States, regardless of whether they belong to a union. However, because the NLRA does not apply to “supervisors”, it has no bearing on separation or severance agreements entered into by workers who had authority “to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees.”
Does the Decision Impact Past Severance Agreements?
Another unresolved issue is whether this decision affects severance or separation agreements entered into before February 21, 2023—the date of the decision. Given that there is only a six-month statute of limitations for workers to file charges for violations of the NLRA, most employees who entered into severance agreements likely could no longer file a charge that the agreement violated the NLRA. However, if an employee tried to enforce such a nondisparagement or confidentiality clause, the employee may have legal recourse.
While the decision will likely be appealed and certain questions remain unanswered, the McLaren Macomb decision is a positive development for workers. If you have any questions about the enforceability of your past separation or severance agreement, or you are in currently in the process of negotiating such agreement, the experienced employment attorneys at Schaefer Halleen, LLC are here to assist you.
