On February 21, 2023, the National Labor Relations Board (“NLRB”) issued a significant, but not surprising, decision in McLaren Macomb that negatively impacts the right of employers to include confidentiality and non-disparagement provisions in severance agreements with most employees. Even though NLRB matters typically involve union employers, the NLRB does have jurisdiction over non-union workplaces, so all employers should take note of the McLaren Macomb decision.
The NLRB has jurisdiction to hear disputes arising under the National Labor Relations Act (“NLRA”), which, among other things, protects the rights of workers to collectively bargain and unionize. Since 2008, employers have been faced with the dilemma that the NLRB has interpreted the scope of the NLRA broadly under Democrat Administrations (i.e., Presidents Obama and Biden) and more narrowly under Republican Administrations (i.e., President Trump). Thus, what is permissible under one Administration may become impermissible under a different administration.
That is what happened in the McLaren Macomb case. Specifically, the NLRB held that merely offering a severance agreement to an employee containing “sweepingly broad” confidentiality and non-disparagement provisions is an unfair labor practice under Section 7 of the NLRA, making the severance agreement invalid. Under NLRB decisions during the Trump Administration, confidentiality and non-disparagement provisions were generally permissible.
Employers should note that decision does not impact all severance agreements as not all workers are covered by Section 7. Specifically, independent contractors, managers and supervisors, and blood relatives of an employer are not subject to Section 7 of the NLRA, so the McLaren Macomb decision is not binding on severance agreements with such workers. It is important for employers to be aware, however, that courts and the NLRB will look at a worker’s job duties, not just job title, to determine if a worker was properly categorized.
Although the decision dealt specifically with severance agreement, the decision harkens back to the stricter scrutiny under which company policies were viewed during the Obama Administration and may indicate a shift back to the NLRB scrutinizing all workplace policies. Employers should, thus, consult with knowledgeable counsel to review not only their existing severance agreements, but also other employment policies in order to avoid unnecessary legal liabilities.
If you have questions about your business’s severance agreements or employment practices, please contact us at (201) 345-5412, or through our online scheduling system, to schedule a complimentary consultation.
Information contained in this blog is provided for informational purposes and does not constitute legal advice or opinion. You should consult with an attorney regarding the specifics of your matter or legal issue.