By: Cary Burke
As we previously posted here, on February 21, 2023, the National Labor Relations Board (“NLRB” or “Board”) ruled in McLaren Macomb, 372 NLRB No. 58, that the mere proffer of a draft severance agreement containing broad confidentiality and non-disparagement provisions violated the National Labor Relations Act (“NLRA” or “Act”).
Since that time, employers have been scratching their heads regarding whether and how they might include any confidentiality or non-disparagement provisions in severance agreements to employees. Earlier today, General Counsel Jennifer Abruzzo provided labor watchers with at least some answers when releasing GC Memo 23-05 (the “memo”), which purports to instruct Regions on responding to inquiries “about implications stemming from” the McLaren decision. Of course, it’s important to keep in mind that this memo is not the law, and is not binding on anyone, save for the Regions, which may pursue unfair labor practice charges based on the guidance therein.
To start, severance agreements are not “banned.” Employers, rather, may continue to proffer and enter into severance agreements so long as they “do not have overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees.” In addition, and as expected, the decision applies retroactively. Unlawful provisions in the severance agreement, moreover, should generally be excised, and will not invalidate the entire agreement.
Surprisingly, though, the General Counsel appears to take the position that maintaining or enforcing a previously-executed severance agreement that contains purportedly unlawful provisions would be considered a “continuing violation,” and would not be subject to the Board’s six-month statute of limitations. In other words, former employees who entered into severance agreements with purportedly unlawful language could file an unfair labor practice charge past the six-month statute of limitations deadline set out in Section 10(b) of the Act.
The Memo further posits that McLaren’s prohibition on overly broad confidentiality and non-disparagement provisions could apply to statutory supervisors, to the extent the severance agreement prohibited a supervisor from participating in a Board investigation.
Of further concern to employers, the memo provides that other typical restrictions in severance agreements could be unlawful, including: 1) non-compete clauses; 2) non-solicitation clauses; 3) no-poaching clauses; 4) broad liability releases; 5) covenants not to sue; and 6) post-termination cooperation clauses.
Ultimately, the General Counsel’s guidance – far from offering assurances to employers – seems to expand McLaren’s reach to now possibly apply to agreements to former supervisors, agreements proffered to employees beyond the Board’s six-month statute of limitations, and to typical post-employment restrictions, like non-competition agreements. This approach – which signals a further expansion of Section 7 rights into typical employer/employee interactions – follows the General Counsel’s recent comments that the Board should return to the “inherently concerted doctrine,” which holds that employee discussions about race, gender, or “insurance coverage” are protected by the Act.
Employers with questions on this memo should reach out to their Seyfarth attorney or other able labor counsel.