Employers should review and tailor their confidentiality and non-disparagement covenants to mitigate risk of a finding that such covenants are unlawful.

On February 21, 2023, the National Labor Relations Board (the NLRB) ruled that confidentiality and non-disparagement clauses in severance agreements violate Section 7 of the National Labor Relations Act (the NLRA) if they restrict workers from engaging in protected activity. Such protected activity includes criticizing employer policies with coworkers and former coworkers; discussing severance, wages, and other terms and conditions of employment; and cooperating in NLRB investigations. The decision in McLaren Macomb reverses NLRB positions taken under the last administration and returns to longstanding historical principles. The decision, which takes effect immediately and applies to existing agreements, carries practical implications for employers, many of whom regularly enter into and rely upon severance and other agreements containing broad confidentiality and non-disparagement covenants, once sanctioned by the NLRB.