National Labor Relations Board Sets Limits on Severance Agreement Provisions

Last month, the National Labor Relations Board (NLRB) made a decision that changed the game regarding severance agreements. The ruling confirmed that overly broad confidentiality and non-disparagement clauses have a “clear chilling tendency” and that offering agreements with such provisions violates the law. However, the NLRB did not ban severance agreements outright, as long as they are narrowly tailored.

Severance agreements are still allowed, but with certain limitations as confirmed by the NLRB decision. Employers must take care to draft severance agreements that do not include overly broad confidentiality and non-disparagement provisions. These types of clauses create an environment in which employees may feel that they cannot speak out against their employer, even if they have legitimate concerns about the conditions of their employment or the workplace culture.

Overly broad confidentiality and non-disparagement provisions have a “clear chilling tendency.” The NLRB has found that confidentiality and non-disparagement provisions in severance agreements are unlawful when they prevent employees from exercising their rights under the National Labor Relations Act (NLRA). These provisions are overly restrictive and prevent employees from speaking out about legitimate concerns, which can be protected under the NLRA.

Employers should take caution when drafting severance agreements. According to the NLRB decision, offering agreements with overly broad confidentiality and non-disparagement provisions violates the law. This is because such provisions create a legally binding agreement that reinforces the employer’s efforts to restrict an employee’s protected rights.

The good news is that confidentiality and non-disparagement provisions in severance agreements are still permitted – as long as they are narrowly tailored. The NLRB decision reiterated the importance of narrowly tailoring such provisions, which should include a temporal limitation and should be conveyed as clearly as possible to avoid confusion.

According to the NLRB’s latest memo, employers should avoid using language that may interfere with their employees’ exercise of NLRA rights in any form of communication. This includes handbooks, policies, forms, and other less formal agreements such as severance agreements. It is suggested that supervisors should not discourage employees from discussing the terms of their severance agreements, nor should they retaliate against those who attempt to do so.

Employers need to be aware that the NLRB’s decision has a retroactive effect, i.e., it applies to both existing and new severance agreements. If they are found to have violated these provisions, employers may be subject to legal penalties or may be required to rewrite the provisions in question. Therefore, it is advisable for companies to review their existing severance agreements to ensure compliance with the new guidelines.

The importance of tailoring agreement language cannot be overstated. It is crucial for employers to carefully draft and tailor the language used in severance agreements. The NLRB decision serves as a reminder that boilerplate savings clauses or disclaimers will not necessarily cure overly broad provisions. Employers must reassure employees that they still have the ability to exercise their NLRA rights without fear of retaliation, censorship, or any other undue limitation.

The recent decision of the NLRB on severance agreements has established clear limits on confidentiality and non-disparagement provisions that are too broad. To avoid legal repercussions and difficulties, employers should meticulously draft the language used in severance agreements to restrict their employees’ NLRA rights as narrowly as possible. Employers should also avoid using language that could interfere with the exercise of NLRA rights in any other communications with their employees.

Explore more

How to Uncover Authentic Work-Life Balance in Interviews

Navigating the complex landscape of professional recruitment in the current era demands a sophisticated set of diagnostic tools to differentiate between a company’s polished public image and the actual daily experiences of its workforce. Most job seekers approach the subject of work-life balance with a directness that inadvertently triggers a rehearsed corporate script. When a candidate asks if a company

Will Robotics Finally Automate Garment Manufacturing?

Walking through a modern clothing factory today reveals a surprising scene where high-tech digital design software meets the century-old manual labor of a person sitting at a sewing machine; this juxtaposition highlights the stubborn resistance of fabric to full automation. While industrial robots have mastered the assembly of complex automobiles and the sorting of high-speed logistics for decades, the simple

Plus One Robotics Proves AI Reliability in Eight-Hour Stream

Watching a machine perform flawlessly for thirty seconds in a carefully curated marketing video is one thing, but witnessing that same hardware tackle a grueling eight-hour shift without a single interruption reveals the true state of modern automation. Plus One Robotics recently broadcasted an unfiltered, continuous stream of its parcel induction system to prove its operational reliability. This live event

AI-Driven Automation Is Transforming UK Wealth Management

The traditional wealth management office, long characterized by mahogany desks and mountains of paperwork, has reached a critical inflection point where human intellect must finally merge with high-velocity algorithmic processing to survive. For decades, the industry operated on a linear growth model that assumed more clients inevitably required more administrative staff to handle the burgeoning weight of compliance and research.

Can KYC Enforcement Layers Secure Modern DevOps Pipelines?

The rapid proliferation of ephemeral cloud-native environments has rendered traditional perimeter-based security almost entirely obsolete in favor of a rigorous identity-centric model. In this decentralized landscape, the old reliance on rigid firewalls and static network zones no longer protects assets against sophisticated lateral movement within software delivery pipelines. Modern infrastructure demands a shift where identity serves as the primary control