NLRB narrows permissible terms in severance agreements

A recent National Labor Relations Board (NLRB) ruling determined that including certain nondisparagement and confidentiality provisions in severance agreements violates the National Labor Relations Act (NLRA).

Facts

McLaren Macomb Hospital permanently furloughed 11 employees and contemporaneously presented them each with a “Severance Agreement, Waiver and Release.” The agreement contained provisions that broadly prohibited them from making oral or written statements disparaging the hospital and from disclosing the terms of their severance agreement.

The NLRB held the non-disparagement and confidentiality provisions unlawfully restrained the employees from exercising their right to engage in protected activity. Specifically, the Board stated the restrained protected activity could include the employees’ ability to make public and private statements about their terms and conditions of employment, assist coworkers with workplace issues, and engage with the NLRB to bring an unfair labor practice (ULP) charge or assist in an investigation.

The Board expressly confirmed that the NLRA’s protections extend to former employees and stressed that severance agreements must be narrowly tailored to protect against infringement of any rights protected by the Act. McLaren Macomb (Case 07-CA-263041).

Lessons to learn

Here are some key takeaways from this case: