Non-Disparagement and Confidentiality Provisions in Employee Agreements: Recent Legal Developments and Their Implications for Employers

Employers have traditionally used non-disparagement and confidentiality provisions to manage threatened or actual claims by employees. Such provisions restrict the spread of information about an employer or their practices and protect sensitive information about the company. However, in recent years, legal decisions have raised questions about the permissibility of such provisions. This article examines these recent developments and their implications for employers.

Recent legal developments

Recent legal decisions have brought into question whether and when non-disparagement and confidentiality provisions in employment agreements are permissible. In particular, the decision in McLaren Macomb, 372 NLRB No. 58 (2022) by the National Labor Relations Board (NLRB) has cast doubt on the legal validity of such provisions. The NLRB held that such provisions in severance agreements have a tendency to interfere with employees’ rights under Section 7 of the National Labor Relations Act (NLRA).

The Impact of McLaren Macomb Hospital on Employee Rights under Section 7

Section 7 of the NLRA is a key piece of legislation that protects employees’ rights to engage in concerted activities. These activities include actions by employees to improve their working conditions or unionizing efforts. Furthermore, Section 7 protections apply to all non-supervisory employees, regardless of whether they are unionized. The decision in McLaren Macomb created a potential conflict between employees’ Section 7 rights and non-disparagement and confidentiality provisions in severance agreements, raising concerns about the validity of such provisions.

Section 7: Rights and Coverage

The coverage of Section 7 rights is extensive, and it includes a broad range of activities by employees to improve their working conditions. The protections offered by Section 7 apply not only to unionized employees but also non-unionized ones. This means that all employees, whether they are part of a union or not, are entitled to engage in concerted activities.

The opinion of the NLRB (National Labor Relations Board) General Counsel

Following the decision in McLaren Macomb, the NLRB’s General Counsel issued an opinion that explicitly addressed the validity of non-disparagement and confidentiality provisions. The General Counsel’s opinion stated that confidentiality provisions in employment agreements are unlawful unless they are “narrowly tailored to restrict the dissemination of proprietary or trade secret information for a period of time based on legitimate business justifications.” Similarly, non-disparagement clauses are prohibited under the opinion unless they are “narrowly tailored, justified,” and “limited to employee statements about the employer that meet the definition of defamation.”

Implications for other employment agreements, policies, and communications

The NLRB General Counsel’s opinion has implications beyond just severance agreements. It also covers other employment agreements, policies, and communications. This means that employers will need to ensure that their employment agreements, policies, and communications do not include non-disparagement and confidentiality provisions that violate the opinion. This may lead to substantial revisions of employment contracts for employers to comply with the law and reduce potential litigation risks.

The General Counsel’s Opinion and Future Challenges for Employers

While the General Counsel’s views do not have the force of law, they signal potential future challenges that employers may face. Companies may have to adopt new policies or revise existing ones to comply with the opinion and avoid potential legal challenges. It is important to note that this is an evolving area of law, and there is still room for debate among courts and regulatory agencies regarding these issues.

Recommendations for employers

It is crucial for employers to review their employment and severance agreements and policies to ensure compliance with the NLRB’s decision in McLaren Macomb and the General Counsel’s opinion. Employers are advised to consult with legal counsel to evaluate any potential litigation risks and to revise their employment agreements, policies, and communications in light of these developments. Failure to comply with these legal requirements may result in costly consequences for companies.

The recent legal developments regarding non-disparagement and confidentiality provisions in employment agreements have significant implications for employers and their potential litigation risks. Employers need to take proactive measures to ensure that their employment agreements, policies, and communications comply with the evolving legal landscape, or they may face significant legal consequences. Consultation with legal counsel is critical in assessing the situation and addressing any potential legal risks.

Explore more

How Is Tabnine Transforming DevOps with AI Workflow Agents?

In the fast-paced realm of software development, DevOps teams are constantly racing against time to deliver high-quality products under tightening deadlines, often facing critical challenges. Picture a scenario where a critical bug emerges just hours before a major release, and the team is buried under repetitive debugging tasks, with documentation lagging behind. This is the reality for many in the

5 Key Pillars for Successful Web App Development

In today’s digital ecosystem, where millions of web applications compete for user attention, standing out requires more than just a sleek interface or innovative features. A staggering number of apps fail to retain users due to preventable issues like security breaches, slow load times, or poor accessibility across devices, underscoring the critical need for a strategic framework that ensures not

How Is Qovery’s AI Revolutionizing DevOps Automation?

Introduction to DevOps and the Role of AI In an era where software development cycles are shrinking and deployment demands are skyrocketing, the DevOps industry stands as the backbone of modern digital transformation, bridging the gap between development and operations to ensure seamless delivery. The pressure to release faster without compromising quality has exposed inefficiencies in traditional workflows, pushing organizations

DevSecOps: Balancing Speed and Security in Development

Today, we’re thrilled to sit down with Dominic Jainy, a seasoned IT professional whose deep expertise in artificial intelligence, machine learning, and blockchain also extends into the critical realm of DevSecOps. With a passion for merging cutting-edge technology with secure development practices, Dominic has been at the forefront of helping organizations balance the relentless pace of software delivery with robust

How Will Dreamdata’s $55M Funding Transform B2B Marketing?

Today, we’re thrilled to sit down with Aisha Amaira, a seasoned MarTech expert with a deep passion for blending technology and marketing strategies. With her extensive background in CRM marketing technology and customer data platforms, Aisha has a unique perspective on how businesses can harness innovation to uncover vital customer insights. In this conversation, we dive into the evolving landscape