By Catherine Williams, Esq.
On March 22, 2023, the General Counsel of the National Labor Relations Board (NLRB) issued a guidance memorandum clarifying the NLRB’s position on a number of issues employers have grappled with in the wake of the NLRB’s February 2023 McLaren Macomb decision, which addressed the permissible scope of confidentiality and non-disparagement provisions in severance agreements. For more information about the McLaren decision, please see our prior alert (HERE).
The new guidance memorandum addresses the following points:
- May employers still offer severance agreements? Employers may still offer and enforce lawful severance agreements. However, in the NLRB’s view, a lawful severance agreement is one that does not include overly broad provisions affecting employees’ rights to “engage with one another to improve their lot as employees,” including through the media and other third parties.
- How does the McLaren decision apply to supervisors? While supervisors are generally not protected by the NLRA, employers should be aware that it is an unlawful labor practice to retaliate against a supervisor who refuses to commit an unfair labor practice on the employer’s behalf. Accordingly, it is the NLRB’s position that an employer may not retaliate against a supervisor who refuses to offer an unlawful overbroad severance agreement to an employee. Further, it could be an unlawful practice to offer a severance agreement to a supervisor in order to prevent the supervisor from, for example, participating in an NLRB proceeding.
- Does the McLaren decision apply to agreements with former employees? Yes, the NLRB takes the position that former employees are entitled to the same protections under the NLRA as current employees.
- Are agreements entered into prior to the McLaren decision still enforceable? While the McLaren decision does not automatically invalidate prior agreements with overbroad provisions, the NLRB takes the position that maintaining or enforcing a prior severance agreement in a manner that is inconsistent with McLaren would be a new violation of the NLRA. In addition, employers should be aware that the NLRB has settled cases by requiring employers to notify former employees that overbroad provisions in their severance agreements would no longer apply.
- If an employer previously entered into a severance agreement with overbroad provisions under McLaren, would the entire agreement now be found void? The NLRB does not generally take the position that the entire agreement should be considered void. Instead, the NLRB takes the position that the overbroad provision(s) should be considered void. The memorandum further states that if the NLRB is considering a charge based solely on the offer of an agreement with overbroad provisions, the NLRB will view it favorably—and consider a merit dismissal of the charge—if the employer can show that it contacted employees subject to severance agreements with overly broad provisions and advised them that the provisions were null and void and that the employer would not attempt to enforce the provisions or obtain damages or other penalties for their breach.
- May an employer offer an agreement with provisions that would otherwise be overbroad under the McLaren decision if it does so at the employee’s request? The NLRB takes the position that it makes no difference if the employee requests the provision.
- What type of non-disparagement provision is lawful under McLaren? The NLRB acknowledges that a non-disparagement provision may still be lawful if it is: (i) limited to “employee statements about the employer” (and not also the employer’s officers, representatives, employees, etc.), and (ii) limited to statements that “meet the definition of defamation as being maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity.”
- Is it unlawful under McLaren for an employer to enter into a settlement agreement with an employee that requires that the terms of the agreement be kept confidential? While the memorandum does not address this question in full, it does state that when the NLRB is considering a request to withdraw a charge based on a private settlement, the NLRB may approve the request even where the agreement requires that the financial terms be kept confidential, because doing so “would not typically interfere with Section 7 rights, and promotes quick resolution of labor disputes.”
- Is it sufficient for employers to include a “savings clause” or disclaimer in their agreements with employees (e.g., a separate provision stating that, for example, nothing in the agreement is intended to prohibit employees from engaging in activities protected by Section 7 of the NLRA)? The NLRB does not rule out the possibility that a savings clause or disclaimer could be useful. However, it cautions that savings clauses or disclaimers will not necessarily cure overbroad provisions, especially if the agreement as a whole provides “mixed or inconsistent messages” to employees. The memorandum suggests that a “prominent” disclaimer that expressly sets out the employee’s statutory rights might, in the NLRB’s view, adequately mitigate the potentially coercive impact of an overbroad confidentiality or non-disparagement provision. The memorandum further advises that the express description of statutory rights should focus on listing the Section 7 activities that are of primary importance in fulfilling the NLRA’s purpose and that are most likely to be engaged in by employees. The memorandum includes a lengthy list of nine rights as suggested “model language.”
- Does the reasoning in McLaren apply to provisions other than confidentiality and non-disparagement provisions? Yes, the NLRB takes the position that other common provisions in severance agreements, if they are overbroad, might interfere with employees’ exercise of their Section 7 rights, including non-compete and non-solicit provisions; no-poaching clauses; broad releases and covenants not to sue that go beyond the employer or cover future claims; and cooperation requirements involving current or future investigations or proceedings that could implicate an employee’s Section 7 rights (including, for example, their right to refrain from testifying against co-workers in an unfair labor practice proceeding).
- Does the reasoning in McLaren apply to other agreements or communications with employees? Yes, the NLRB takes the position that the reasoning applies to overly broad provisions in any employer communication with employees unless the communication is “narrowly tailored to address a special circumstance justifying the impingement on workers’ rights.”
Employers should review all of their standard employment-related agreements and policies, including offer letters, employment agreements, non-disclosure agreements, non-compete/ non-solicit agreements, severance agreements, and employee handbooks, and consider whether modifications are appropriate in light of this new guidance. Among other things, employers may wish to consider whether to narrow the scope of confidentiality and non-disparagement provisions and whether any “savings clauses” and/or disclaimers should be strengthened or modified.
Employers who are considering enforcing an existing agreement, or claiming breach of an existing agreement, should be aware that if the agreement contains provisions that would now be considered overbroad, the attempt to enforce the agreement may be unlawful under the NLRA. Employers should also take note of the NLRB’s apparent stance that it may be unlawful to attempt to enforce a confidentiality or non-disparagement provision in a way that would prevent an employee or former employee from speaking to the media or others (including, presumably, posting on social media) about the terms and conditions of their employment.
If you need assistance reviewing your agreements, policies, and/or handbooks pertaining to this new guidance provided by the NLRB, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100.