A recent National Labor Relations Board ruling holds that the mere proffer of a draft severance agreement to an employee exiting employment which includes broad confidentiality and non-disparagement provisions violates the National Labor Relations Act.
In the individual case that set the new precedent, the board’s Democratic majority overruled two Trump–era decisions and held that the provisions at issue under this fact pattern violate the NLRA.
Regarding the non-disparagement provision in the same agreement, the NLRB held that employee public statements about the workplace are central to the exercise of employee rights under the labor act.
The board added that no severance agreement could prohibit any statement accusing the employer of violating the NLRA. This subject matter covers employee conduct regarding any labor issue, dispute, or term and condition of employment.
In addition, terms of such an agreement cannot interfere with the exiting employee’s efforts to assist fellow employees, which would include future cooperation with an NLRB investigation.
Attorneys Arthur Telegen, Cary Reid Burke, and Alex Reganata of the Seyfarth Shaw law firm point out that in the case before the board that sets the precedent, the confidentiality provision was declared unlawful because it prevented employees from “disclosing even the existence of an unlawful provision contained in the agreement,” interfering with their ability to file charges with the NLRB or participate in an investigation.
The board also determined that the confidentiality provision would have interfered with employees’ ability to speak with co-workers and their union about the contents of their severance agreement.
“Employers should take care to draft such agreements to serve only necessary business interests,” the attorneys urged. Such provisions may safely be eliminated when there is a large-scale reduction in force or if an employee did not have access to confidential information.
