Employers can no longer use severance agreements in sweeping terms to prevent laid-off employees from talking about their work or criticizing their former employer, under a decision from the National Labor Relations Board (NLRB).
Restrictions on Offer of Severance
The board explained in its decision on Feb. 21 that offering employees a severance agreement that requires them to broadly give up their rights under the National Labor Relations Act (NLRA) is unlawful. The board said that such an offer is an attempt to deter employees from exercising their rights when employees may feel they must give up their rights to get the benefits provided in the agreement.
Prior Precedent Reversed
The NLRB's decision reversed two prior decisions, both made in 2020, holding that such severance agreements were lawful. The decision could be significant. In recent years, limits on free speech have become an increasingly common aspect of severance agreements, meant to limit damage and backlash stemming from mass layoffs.
Michigan Hospital Involved
This decision involved a Michigan hospital that in the middle of the COVID-19 pandemic, terminated 11 union employees. The employer asked them, in exchange for a payout, to sign severance agreements barring them from making public comments that "could disparage or harm" the company.
Agreements with nondisparagement clauses were determined to be "entirely voluntary" in the prior rulings.
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