Employment / 1 min read
The National Labor Relations Board’s (“NLRB”) recent decision held that confidentiality and non-disparagement provisions in employee severance agreements likely interfere with the exercise of employees’ labor rights. The NLRB has subsequently published guidance aimed at answering questions relating to the NLRB’s blockbuster ruling.
Does the rule only apply to rank-and-file employees?
Yes, for the most part. The NLRB states that, while the NLRA generally does not protect supervisors, it does protect a supervisor who is the victim of retaliation for refusing an employer’s directive to violate the NLRA. Derivatively, the NLRA would protect a supervisor who refused an employer’s directive to offer an employee a severance agreement with overbroad confidentiality or non-disparagement clauses.
Does the rule apply retroactively?
Yes, but the rule is subject to a 6-month statute of limitations. However, maintaining or enforcing a previously executed severance agreement with unlawful provisions continues to be a violation and would not be time-barred.
Do confidentiality or non-disparagement provisions invalidate the entire severance agreement?
No. The NLRB generally makes decisions based on unlawful provisions, only. Therefore, the NLRB will likely void the unlawful provisions and keep the remainder of the severance agreement intact, regardless of whether there is a severability clause or not. The NLRB advises, however, that employers should consider curing violations now by contacting former employees subject to severance agreements with overbroad provisions, advising them that the provisions are not enforceable and that the employer will not enforce any breach of those unlawful provisions.
What confidentiality provisions can be contained in rank-and-file severance agreements?
The NLRB clarifies that settlement agreements with a confidentiality clause only prohibiting disclosure of the financial terms would not typically interfere with the exercise of NLRA rights.
What about non-disparagement clauses in severance agreements?
A narrowly tailored, justified, non-disparagement provision limited to employee statements about the employer that meets 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, may be found lawful.