The National Labor Relations Board (NLRB) recently ruled that certain non-disparagement and confidentiality provisions in severance agreements violate the National Labor Relations Act (NLRA). The Board found that these provisions unlawfully restrain employees from exercising their rights to engage in protected activity. This ruling has significant implications for employers who use severance agreements and has prompted the need to revisit and tailor these agreements to avoid legal consequences.
The NLRB ruled that non-disparagement and confidentiality provisions in severance agreements violate the NLRA by restricting employees from engaging in protected activity. Specifically, the Board stated that such provisions restrain protected activity by limiting an employee’s ability to make public and private statements about their terms and conditions of employment, assist coworkers with workplace issues, and engage with the NLRB to bring an unfair labor practice (ULP) charge or assist in an investigation.
The NLRB’s ruling highlights several protected activities that are restrained by nondisparagement and confidentiality provisions. These activities include an employee’s ability to speak out publicly or privately about their employment conditions, as well as their capacity to assist coworkers facing workplace concerns or violations. These provisions also limit an individual’s ability to work with the NLRB to bring charges against the employer or assist with ongoing investigations.
The NLRA protects former employees. The Board’s ruling also emphasizes that the NLRA’s protections extend to former employees. This means that severance agreements must not infringe upon these protected rights, even after an employee’s employment has ended. As a result, employers must be aware of the legal implications of including non-disparagement and confidentiality provisions in agreements to avoid legal repercussions.
In light of the NLRB ruling, employers must revisit their form separation agreements and tailor them to address specific concerns. This may include adding language that excepts NLRA-protected activity from confidentiality provisions. Additionally, severance agreements should be framed using terms that are excluded from NLRA protection rather than using the term “disparagement.”
Enforcing preexisting confidentiality and non-disparagement clauses that the National Labor Relations Board (NLRB) considers overbroad may pose a risk of Unfair Labor Practice (ULP) charges and may result in the award of monetary damages. While the National Labor Relations Act (NLRA) does not specifically allow for monetary penalties, the general counsel of the NLRB currently has a policy of seeking monetary relief directly related to a ULP, which includes attorney’s fees and costs. It is crucial for employers to consider these risks before enforcing such provisions.
In conclusion, the recent NLRB ruling on nondisparagement and confidentiality provisions in severance agreements has brought about significant changes for employers. The ruling emphasizes the importance of not including provisions that restrict employees from engaging in protected activity under the NLRA. Employers must customize their severance agreements to address specific concerns and avoid legal repercussions. While generic language may not be adequate, provisions can still be modified to address concerns and prevent harm. Employers who do not comply with the NLRB’s ruling run the risk of facing legal and financial repercussions.