Navigating the McLaren Macomb Ruling: A New Era in Severance Agreements and the Impact on Employers and Employees

Severance agreements are often used by employers to ensure a smooth transition for employees who are leaving the company. These agreements typically include confidentiality and non-disparagement clauses that prohibit the employee from speaking negatively about the company or revealing confidential information. However, a recent decision by the National Labor Relations Board (NLRB) has paved the way for employees to challenge the legality of these clauses.

Background on severance agreements and their use of non-disparagement and confidentiality provisions

Employers often offer severance agreements to departing employees to minimize the risk of litigation and protect their trade secrets and intellectual property. These agreements typically include non-disparagement and confidentiality provisions that prohibit the employee from speaking negatively about the company or revealing confidential information.

These clauses are designed to protect the company’s reputation and trade secrets, but they have been criticized for their chilling effect on employee speech. Employees may be reluctant to speak out about issues of concern if they fear retaliation or if their severance payments are contingent upon their silence.

McLaren decision and its impact on severance agreements

In February 2021, the NLRB issued a decision in the case of Raytheon Technologies Corp. and United Steelworkers, Local 12012, AFL-CIO, stating that conditioning severance agreements on the acceptance of non-disparagement and confidentiality terms is unlawful.

According to the Board, these clauses “interfere with employees’ Section 7 rights to engage in concerted activity for mutual aid or protection by limiting the information about the employer that the employee can share with others.” The Board also found that these clauses have a chilling effect on employees’ willingness to engage in protected activity.

Guidance for Employers on How to Comply with the McLaren Decision

The NLRB has provided guidance for employers on how to comply with the McLaren decision. Employers must review both their current and future severance agreements, as well as any agreements that could be deemed to infringe upon employees’ Section 7 rights.

The board will attempt to strike overbroad, violative provisions of severance agreements instead of invalidating entire agreements. Narrowly tailored confidentiality and non-disparagement provisions may still be considered lawful, but employers should ensure that they do not have a chilling effect on employee speech.

The NLRB is considering the potential extension of the McLaren decision to include severance agreements issued to supervisors under certain circumstances. If a supervisor is also an employee who engages in protected activity, their severance agreement may be subject to the same scrutiny as those agreements of non-supervisory employees.

The McLaren decision has a retroactive effect, so “maintaining and/or enforcing a previously entered severance agreement with unlawful provisions” will be considered a continuous violation and will, therefore, not be time-barred. Employers may be liable for violating the NLRA even if the agreement was signed before the McLaren decision.

Remedies for overbroad or violative provisions in severance agreements

The board will attempt to sever any overbroad or violative provisions in severance agreements instead of invalidating the entire agreement. Employers may be required to revise their severance agreements to remove any offending provisions.

Exceptions for narrowly tailored confidentiality and non-disparagement provisions

Narrowly tailored confidentiality and non-disparagement provisions may still be considered lawful. Employers should ensure that these clauses do not have a chilling effect on employee speech and that they are narrowly tailored to only protect the company’s legitimate business interests.

Discussion of protected activity under the NLRA, including conversations about race and racism:
The NLRB has also clarified that discussions about race and conversations regarding racism could be considered “concerted protected activity” under the NLRA. If an employee’s severance agreement prohibits them from discussing these issues, it may be deemed unlawful.

It is crucially important for employers to consider whether an employee has engaged in any protected activity before taking adverse action against them. This includes all employment laws, including the NLRA. If employers take adverse action based on protected activity, they may be held liable for violating employee rights.

The NLRB’s decision in McLaren carries significant implications for employers who frequently enter into severance agreements containing broad confidentiality and non-disparagement clauses. Employers must review their existing and future agreements in light of this decision and ensure that they do not impede employees’ Section 7 rights. The guidance provided by the Board offers employers a framework to comply with the ruling and minimize their liability.

Explore more

Is ChatGPT the Future of Hotel and Travel Advertising?

The transition from scanning data to seeking synthesized advice represents a permanent change in how tourism destinations and luxury resorts must approach digital visibility. As the travel industry reaches a critical juncture in 2026, the reliance on static search results has dwindled in favor of interactive, intelligent dialogue. Syndacast, a prominent agency in the Asia-Pacific region, has recognized this evolution

Can Tokenized Deposits Transform Canada’s Financial Future?

Regulated institutional trust is being combined with blockchain automation to create a foundation for a twenty-four-seven tokenized economy in Canada. This transition represents a significant departure from the traditional financial architecture that has governed the nation for decades. Historically, Canadian commercial bank deposits existed as static entries within private, siloed ledgers, requiring complex reconciliation processes and limited by the operational

How Is CyphaLab Bridging the Gap Between TradFi and DeFi?

The movement of assets between traditional brokerage systems and decentralized liquidity venues is streamlined through a specialized transaction orchestration layer. In the current economic climate of 2026, the global financial industry is witnessing a pivotal shift as blockchain technology moves beyond its experimental roots to become a core foundation of asset management. CyphaLab has emerged as a major driver of

Why Did Sequans Abandon Its Bitcoin Treasury Strategy?

The official termination of the Bitcoin treasury strategy on September 24, 2026, allowed the firm to redirect all resources toward its expanding 4G and 5G cellular solutions. This strategic pivot marked the end of a high-stakes financial journey for Sequans Communications, which had initially sought to redefine the role of digital assets within the semiconductor industry. Throughout the previous fifteen

Will AI Data Centers Define the Future of Hamilton?

The defeat of the proposed development moratorium was influenced by concerns that a blanket ban might exceed the city’s legal jurisdiction and lead to litigation. This legislative turning point has placed Hamilton at a pivotal crossroads where the burgeoning global industry of artificial intelligence (AI) intersects directly with local environmental stewardship and complex urban planning strategies. As the municipal election