The National Labor Relations Board has returned to its pre-2020 standard restricting certain confidentiality and non-disparagement clauses in departing employees’ severance agreements. McLaren Macomb, 372 NLRB No. 58 (2023).
Prior to the ruling, the Board held that severance agreements, by themselves, were not unlawful, with the Board focusing on the voluntary circumstances of the agreement’s proffer rather than the language of the agreement.
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, including prohibiting employees from disparaging their employer and disclosing terms of the agreement.
Under long-standing precedent, severance agreements were unlawful if they had a reasonable tendency to interfere with, restrain, or coerce employees’ exercise of their Section 7 organizing and bargaining rights. As a result, employers were generally prohibited from offering severance pay to departing employees in exchange for them signing off on broad release language, such as terms that prohibit them from pursuing charges under the Act. Severance agreements also could not prohibit employees from publicly discussing working conditions or participating in Board investigations.
In 2020, the Trump Board reversed precedent in a series of two cases and determined employers generally did not violate the Act by offering departing employees separation agreements...
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