NLRB takes a Stance on Employee Severance Agreements

On February 21, 2023, the National Labor Relations Board (the “Board”) issued a decision in McLaren Macomb finding that the employer violated the National Labor Relations Act (the “NLRA”) by providing employees a severance agreement containing confidentiality and non-disclosure provisions that restricted employees’ NLRA Section 7 rights.

Prior to the Board’s recent decision, the Board had held that severance agreements, by themselves, were not unlawful. Previously, the Board focused on the voluntary circumstances of the agreement rather than the particular language of the agreement. However, now an employer violates Section 8(a)(1) of the National Labor Relations Act if a severance agreement requires employees to “broadly waive their rights” under the Act. This waiver of rights includes prohibiting employees from disparaging their employer and disclosing terms of the agreement.

The McLaren decision makes clear that the Board will closely scrutinize whether the language of the severance agreements restricts employees’ NLRA rights. Since the NLRA can apply to even non-unionized employers, all employers should consider the potential risks with confidentiality and non-disclosure provisions in their severance agreements. How an employer proceeds will depend on that employer’s specific evaluation of the circumstances in light of the potential risks.

Employers with concerns about utilizing severance agreements that include the types of provisions discussed in the McLaren opinion should contact a labor and employment law attorney.