In the last article, we covered an Iowa Court of Appeals case relating to severance/separation agreements and whistleblower claims. Other issues have cropped up regarding severance agreements and their enforceability but on the federal level. The National Labor Relations Board (NLRB) decided McLaren Macomb and OPEIU, AFL-CIO, relating to the structure and content of severance agreements and their enforceability under the NLRA. Section 7 of the NLRA is enforceable by the NLRB regardless of whether you operate a unionized workplace.
Over the years, the NLRB has taken various positions regarding what activities might “chill” an employee or prior employee’s right to organize, with some directors being very narrow in their interpretation and others extremely expansive. In evaluating whether language and severance agreements “chilled” these rights in 2020, the NLRB (in Baylor and IGT) looked at both the plain language of the agreement and added specific conditions which result in invalidating a severance agreement. This included some form of legal violation such as unlawful termination as well as demonstrating anti-union animus by the employer. These 2020 additions are now removed through the McLaren determination, with the NLRB stating it is going back to a “plain language” determination.
Nondisclosure
In McLaren, a Michigan hospital furloughed multiple employees and eventually terminated their employment providing them with severance agreements. The severance agreements contained confidentiality and nondisclosure language. The confidentiality language concluded with a statement that the employee would not provide information except under certain circumstances including if “legally compelled to do so by a court or administrative agency of competent jurisdiction.”
The agreement also included a nondisclosure section that prohibited disclosure of confidential materials but also made a statement that the employee agreed not to disparage or harm the image of the employer. The Court specifically states in the McLaren decision, “we therefore overruled both decisions (Baylor and IGT) in return to the prior, well-established principle that a severance agreement is unlawful if its terms have a reasonable tenancy to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights, and that employers proffer of such agreements to employees is unlawful.”
Non-Disparagement Clause
The Board took particular issue with the non-disparagement clause that the employee could not make statements to the general public or others which would harm the image of the employer, finding it a clear violation of the act.
For the employer, the difficulty in this circumstance is that the NLRB appears to want a time limit and much more limited definitions of what disparaging comments may be while the employer has no ability to gauge what type of inappropriate or defamatory statements an ex-employee might make.
Unfortunately, this poses difficulty for employers, as there is no clear way to address the Board’s statements in McLaren and maintain the traditional confidentiality or non-disparagement clauses in separation agreements. Employers may consider carving out specific rights of the employee in the agreement, including a statement allowing both the employee and employer to make any statements as required by law and specifically cite Section 7 and the NLRA. As employers found with the varying NLRB assessments regarding statements requiring professionalism or even requiring that employees be polite in the workplace, such disclaimers are not perfect but can help defend the validity of any policy, practice, or severance agreement. Also note that this appears to carry forward into a settlement of any contested claim and potential language changes should also be included in settlement agreements.
