As the National Labor Relations Board (NLRB) continues to refine what constitutes “unfair labor practices” affecting workers, its recent decision in McLaren Macomb could have significant consequences for employers. In the case, the Board considered the structure and content of severance agreements and their enforceability under the National Labor Relations Act (NLRA). This article will examine the Board’s positions regarding activities that could “chill” employee rights to organize, the evaluation of language and severance agreements in 2020, the reversal of these 2020 additions in the McLaren Macomb case, and how this decision could affect employers moving forward.
The NLRB’s Positions on Activities That Could “Chill” an Employee’s Right to Organize
The NLRB has long held that employers cannot engage in activities that “chill” employees from organizing or joining a union. This includes threats of retaliation, promised rewards for not engaging in protected activities (such as unionizing), or conduct that would suggest that employees’ union activities violate company policies. The Board has also held that employers may not engage in practices or make statements that could reasonably be perceived as attempting to restrict communications between employees regarding unions or hiring.
Evaluation of Language and Severance Agreements That Could “Chill” Employees’ Rights in 2020
Over the last several years, the board has taken various positions regarding activities that might “chill” an employee’s right to organize. These positions have included scrutinizing the language of employment agreements and confidentiality clauses. In 2020, the board examined another aspect of this issue and considered whether language and severance agreements could “chill” employees’ rights to organize. The board evaluated both the plain language of the agreement and its impact on employees’ rights under Section 7 of the NLRA.
The Reversal of the 2020 Additions in the McLaren Macomb Case
However, the Board has now reversed these 2020 additions with its recent ruling of McLaren Macomb. The Board returned to the prior well-established principle that a severance agreement is unlawful if its terms have a reasonable tendency to interfere with, restrain or coerce employees in the exercise of their Section 7 rights. Employers’ proffer of such agreements to employees is also unlawful. This means that employers may not use severance agreements to restrict employees’ rights to unionize or engage in other protected activities under the NLRA.
The confidentiality language of the agreement and the non-disclosure section that prohibited disclosure of confidential materials
Regarding McLaren Macomb, the confidentiality language concluded with a statement that the employee would not provide information except under certain circumstances, including if “legally compelled to do so by a court or administrative agency of competent jurisdiction.” The agreement also included a nondisclosure section that prohibited the disclosure of confidential materials, but it also included a statement that the employee agreed not to disparage or harm the image of the employer.
The principle regarding the unlawfulness of a severance agreement is that its terms should not interfere with, restrain, or coerce both employees and employers, as well as proffer of such agreements.
The board specifically stated in the McLaren decision, “We therefore overrule both decisions [Baylor and IGT] and return to the prior, well-established principle that a severance agreement is unlawful if its terms have a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights, and that employers’ offer of such agreements to employees is unlawful.” Employers must carefully review the language in their severance agreements and assess whether they unreasonably restrict employees’ rights.
The board’s issue with the non-disparagement clause in the McLaren decision
The Board took particular issue with the non-disparagement clause that prohibited the employee from making statements to the general public or others that would harm the employer’s image, finding it a clear violation of the Act. When the terms of a severance agreement put a “reasonable person” in mind of not engaging in protected activities under the NLRA, the NLRB will find the agreement unlawful.
Difficulty for Employers in Addressing the Board’s Statements and Maintaining Traditional Confidentiality or Non-Disparagement Clauses in Separation Agreements
Unfortunately, this poses a significant difficulty for employers because there’s no clear way to address the Board’s statements in McLaren and maintain the traditional confidentiality or non-disparagement clauses in separation agreements. However, it should be noted that the Board has not entirely rejected the use of settlement agreements and confidentiality clauses. Instead, it emphasizes that the language of such agreements must not interfere with employees’ right to engage in concerted activity, even when that activity is critical of the employer or its policies.
Outlining Employees’ Specific Rights in Severance Agreements as a Solution
One potential solution for employers is to outline employees’ specific rights in severance agreements and include language affirmatively stating that they are not waiving any rights under the NLRA in exchange for the severance package. The language in such agreements can also be written to ensure that employees understand that they are free to communicate with others about their employment conditions, including their decision to voluntarily accept a severance package.
The carry-forward of this issue into the settlement of any contested claim
It is vital to note that this issue can carry forward into the settlement of any contested claim. Employers may not use language that interferes with employees’ right to engage in protected activities under the NLRA, regardless of the context in which the agreement is signed.
In conclusion, the NLRB’s decision in McLaren Macomb represents a significant development in the Board’s stance regarding the enforceability of severance agreements. As employers navigate this shifting legal landscape, they must carefully review their confidentiality and non-disparagement clauses in separation agreements to ensure that they do not violate the NLRA. Adding specific language that outlines employees’ rights under the NLRA can help ensure that such agreements will not be found to “chill” protected activity, and be deemed unfair labor practices.