NLRB reverses course to establish new restrictions on severance agreements

On February 21, the National Labor Relations Board (NLRB) ruled that overbroad nondisparagement and nondisclosure provisions in severance agreements are an “unfair labor practice” in violation of Section 7 of the National Labor Relations Act (NLRA). The ruling in McLaren Macomb is a reversal of two previous decisions—Baylor University Medical Center and IGT d/b/a International Game Technology—that have been relied upon by employers for the past three years.

What are Section 7 rights?

When most employers think of the NLRA, they think of unions and union-related activity. It’s important to note, however, that the NLRA protects the rights of union and nonunion workers alike when it comes to Section 7.

Section 7 of the Act is a basic federal law that protects the rights of covered workers to engage in protected concerted activities, to form unions, and to engage in collective bargaining activities with their employers over the terms and conditions (e.g., wages, leave policies, etc.) of their employment.

Who are covered workers?

Not all workers are protected workers under Section 7. It doesn’t apply to supervisors, managers, public-sector workers, or workers properly classified as independent contractors. The McLaren Macomb ruling only applies to those protected workers covered by Section 7.

What happened in the McLaren Macomb case?