National Labor Relations Board’s General Counsel Explains Broad Non-Disparagement Provision Violates National Labor Relations Act

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On Nov. 14, 2019, the office of the National Labor Relations Board’s (NLRB) General Counsel released an advice memorandum finding an employer violated federal labor law by requiring employees to sign a broad non-disparagement agreement at the time of hire (the Advice Memorandum).

According to the Advice Memorandum, Stange Law Firm (Stange) required all newly hired support staff and attorneys to sign an employment agreement containing the following (or a similar) non-disparagement provision:

[D]uring and after Employee’s employment or association with Law Firm ends, for any reason, Employee will not in any way criticize, ridicule, disparage, libel, or slander Law Firm, its owners, its partners, or any Law Firm employees, either orally or in writing. However, nothing in this Section 3.2 shall be deemed to limit or prohibit Employee from engaging in concerted group activity and communications with co-employees to try to improve his or her working conditions, as provided under Section 7 of the National Labor Relations Act.

In 2017, Stange filed lawsuits against former employees alleging these former employees had breached the non-disparagement provisions in their employment contracts by criticizing Stange in negative reviews posted on various websites, including Glassdoor.com, Indeed.com, Avvo, Yelp, and Yahoo! Business.

One of the former employees filed a charge with the NLRB claiming the non-disparagement provision was overly broad and that the lawsuits were a form of unlawful retaliation against the workers for exercising their rights under the National Labor Relations Act (NLRA). Stange asserted the broad non-disparagement provision was justified because the firm relies on online advertising and the negative reviews in question could hurt the firm’s business.

The General Counsel concluded that Stange’s non-disparagement provision violated Section 8(a)(1) of the NLRA, explaining that the requirement that employees not “criticize, ridicule, [or] disparage” Stange “restricts core Section 7 activity.” The General Counsel rejected Stange’s reasoning for the broad provision, explaining that “[t]he employer’s asserted interest . . . is not a unique interest nor strong enough to outweigh the significant interference the [provision] has with employee rights.”

The General Counsel also noted that “[t]he purported ‘savings clause’ does not make the rule lawful,” explaining “a reasonable employee would still understand the Employer’s non-disparagement clause as prohibiting him or her from going to a union and saying anything negative about the Employer.” The savings clause, according to the General Counsel, lacked sufficient detail and did not provide the “full panoply” of rights protected by Section 7.  

The General Counsel also concluded that Stange did not retaliate against the former employees by filing a lawsuit because the former employees were not engaged in protected “concerted activity.” The Advice Memorandum explained the former employee’s anonymous posts on Glassdoor and other employer review sites were more analogous to “individual gripes and therefore not concerted.”

What Does This Mean for Employers?

The General Counsel’s Advice Memorandum serves as an important reminder to employers that the NLRB generally disfavors non-disparagement provisions. Employers should consult with counsel prior to including non-disparagement provisions in offer letters or policies.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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