NLRB ruling brings changes to severance agreements

Some employers offer severance agreements to employees when they’re discharged, waiving employees’ rights to potential employment claims in exchange for a few weeks’ or months’ salary. Many agreements also include broad nondisparagement and confidentiality provisions. Employers will likely need to revise those agreements in light of the National Labor Relations Board’s (NLRB) recent decision.

Facts

Last month, the NLRB ruled that offering a severance agreement that requires employees to give up their rights under the National Labor Relations Act (NLRA) is an unfair labor practice. The decision reverses precedent that had approved of such language.

As a reminder, decisions from the NLRB are binding, even if you don’t have a unionized workforce. The rights under the NLRA exist independent of whether your workforce is represented by a union or whether a particular employee is in a union (subject to a carve-out for “supervisors” as defined by the NLRA).

NLRB’s decision in McLaren Macomb

During the COVID-19 pandemic, a government order prohibited McLaren Macomb Hospital in Mt. Clemens, Michigan, from performing elective and outpatient procedures, so the hospital permanently furloughed 11 employees it deemed nonessential and offered them a severance agreement, wavier, and release.