The National Labor Relations Board (NLRB) recently made a significant decision in the case of McLaren Macomb, which has implications for both union and non-union employers in the United States. According to this decision, merely offering a severance agreement to employees can be a violation of the National Labor Relations Act (NLRA) if the agreement’s terms interfere with, restrain, or coerce employees’ NLRA rights. This ruling is a wake-up call for employers to review their severance agreements and ensure that they comply with the NLRA.
Assessing the Legality of Severance Agreements Under the NLRA
The McLane Macomb decision has significant implications for employers in terms of how they draft and enforce their severance agreements. The NLRB assesses the legality of severance agreements under the NLRA by examining whether their terms interfere with employees’ NLRA rights. This can include provisions that restrict employees from forming a union or engaging in collective bargaining. If a provision in a severance agreement affects employees’ NLRA rights, it can be deemed unlawful.
The NLRB’s ruling on Confidentiality and Non-Disparagement Provisions
The NLRB has found that both the confidentiality and non-disparagement provisions of the McLaren Macomb severance agreement were unlawful. The confidentiality provision broadly prohibited an employee from disclosing the agreement to any third-party, including the Board and other employees. The non-disparagement provision prohibited an employee from making statements that disparage or harm the employer, its entities, or its representatives without any temporal limitation.
Why the Confidentiality Provision was Unlawful
The NLRB found that the confidentiality provision was unlawful because it interfered with employees’ NLRA rights. Employees may need to discuss the terms of a severance agreement with their colleagues or with the Board to effectively exercise their NLRA rights. By preventing employees from discussing the agreement with a third party, the confidentiality provision restricted employees’ ability to exercise their rights.
Why the Non-Disparagement Provision was Unlawful
Similarly, the NLRB found the non-disparagement provision unlawful because it prevented employees from making statements that could potentially harm the employer’s image. This prohibition can interfere with employees’ right to engage in concerted activity under the NLRA.
Applying the Decision to Unionized and Non-Unionized Employers
The decision in McLaren Macomb has broad implications, regardless of whether an employer is unionized or non-unionized. Most private sector employers in the United States are covered by the NLRA, which means that most severance agreements would also be subject to the NLRB’s scrutiny. This ruling sends a clear message to employers that they must carefully draft their severance agreements if they want to avoid violating the NLRA and exposing themselves to legal risk.
The Likelihood of NLRA Violations in Severance Agreements
Given the broad scope of the NLRA and the specificity of its provisions, it is likely that many employers unknowingly include language that violates the NLRA in their severance agreements. In light of the McLaren Macomb decision, employers should carefully review their severance agreements with the help of experienced labor counsel to ensure compliance with the NLRA.
Recommendations for Employers
Employers should be proactive in preventing NLRA violations in their severance agreements by carefully reviewing the provisions of each agreement. Employers should also consider providing training to HR personnel and others who are responsible for drafting and administering severance agreements to ensure they are compliant with the NLRA.
The NLRB’s ruling in McLaren Macomb has brought increased attention to employers’ severance agreements and their compliance with the NLRA. Employers must take this ruling seriously and ensure that their severance agreements do not restrict employees’ NLRA rights. By doing so, employers can limit their legal risk and create a more positive relationship with their employees. Careful review and compliance with the NLRA should be the top priority for any employer drafting or administering a severance agreement.
