The NLRB Changes the Rules on Severance Agreements Again: What Employers Need to Know
Friday, February 24, 2023

The National Labor Relations Board (the “Board”) recently overruled a pair of 2020 Board decisions holding that severance agreements containing broad confidentiality and non-disparagement provisions unlawfully restrict employee Section 7 rights to discuss terms and conditions of employment. The decision, issued on February 21, 2023, held that a Michigan hospital violated federal labor law when it offered employees a severance agreement containing what the Board defined as broad confidentiality and non-disparagement provisions that could be interpreted to preclude employees from discussing terms and conditions of employment with co-workers or other third parties, including administrative agencies such as the Board. The Board held that such provisions chill the exercise of Section 7 rights. The 2020 Board decisions had held that inclusion of such provisions were not per se violations of the National Labor Relations Act, and instead required the presence of other unfair labor practices to find them unlawful. Moving forward, the Board will review confidentiality and non-disparagement provisions to determine whether the provisions restrict Section 7 rights regardless of whether there is evidence of union animus or other alleged unfair labor practices.

This change in precedent was not completely unexpected. The Office of the General Counsel announced its intent to review and change the law with respect to confidentiality provisions and separation agreements back in August of 2021. The 21-04 GC Memo also announced the General Counsel’s intent to review existing case law regarding employer handbook rules. In light of this new (or, rather, new again) legal standard, employers should review existing employment documents and policies for overly broad language that could render the desired protections as unlawful. 

 

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