By Jennifer Lippi, SPHR, PHRca

In a recent National Labor Relations Board (“NLRB”) decision McLaren v. Macomb, the Board ruled that offering severance agreements with certain confidentiality and/or non-disparagement provision violates the National Labor Relations Act (“NLRA”).  This serves as a cautionary tale for California employers. 

In the McLaren case, the employer at issue offered severance agreements to employees affected by furloughs. The agreements contained confidentiality and non-disclosure/non-disparagement language.

The confidentiality provision stated:

“The employee acknowledges that the terms of this agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.”

The non-disclosure/non-disparagement provision stated:

“At all times hereafter, the employee promises and agrees not to disclose information, knowledge or materials of a confidential, privileged or proprietary nature of which the employee has or had knowledge of, or involvement with, by reason of the employee’s employment. At all times hereafter, the employee agrees not to make statements to employer’s employees or to the general public which could disparage or harm the image of employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives.”

The Board found both of the provisions problematic under the NLRA. In particular, the Board disliked the restrictions on discussing terms of the agreement with any third persons, and making statements to other employees or the public about the employer. The Board also determined that the mere offering of a severance agreement containing overbroad confidentiality and non-disparagement provisions is unlawful, even if the employee does not sign the agreement.

You may be thinking, “the NLRA does not apply to me” because you do not have a union, but not so fast.  The NLRA still applies to most employers whether or not they are unionized because that act covers the right of all employees to engage in protected concerted activity. 

The bottom line:  In light of the decision, employers should review any non-disparagement and confidentiality agreements in their severance agreements.  Do not use boilerplate separation or severance agreements.  Contact employment counsel asap to determine the best course of action for updating your separation agreements in light of McLaren v. Macomb

If you need a referral to employment counsel to assist with drafting a compliant agreement, please contact your Silvers HR Consultant.