Article contributed by Mark Adams
Coming off the heels of its decision in McLaren Macomb, the National Labor Relations Board has issued guidance for employers on the Board’s decision and its application in practice.
As a backdrop, the case centered upon an employer (a hospital) which had used language in its severance agreements that the Board considered overbroad. Below are the clauses within their agreements that were called into question:
6. Confidentiality Agreement. 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.
7. Non-Disclosure. 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.
According to the Board, the language did not provide any exceptions or references that would enable employees to comment or discuss their concerns about their working conditions which is a right afforded to them under Section 7 of the National Labor Relations Act and that as constructed would have a chilling effect against employees from exercising their rights.
Under the guidance, the Board also notes that whether the employee signs the Severance Agreement or not is immaterial as to whether such an overbroad agreement would be considered unlawful. Rather the mere proffering of the agreement with such overbroad language would be sufficient to establish the unlawful practice. And, what is more telling is that according to the Board, the application of this case is also retroactive too (so this doesn’t only apply to what employers do with severance agreements moving forward but would also reach out to severance agreements that are already out there that you may have).
So what is an employer to do? Review and if needed adjust your severance agreement templates or documents that you use in practice. The Board points in its guidance that “a narrowly-tailored, justified, non-disparagement provision that is limited to employee statements about the employer that meet the definition of defamation as being maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity, may be found lawful.” So, rather than say that employees cannot comment publicly at all, tailor it down towards prohibiting comments that are malicious, or reckless or otherwise knowingly untrue which would cause harm to the organization either financially or harm their reputation. Second, to further ensure that it is tailored to avoid employees from feeling that they are foregoing rights to comment on their wages, hours and working conditions (in other words subjects that are tied to protections under the National Labor Relations Act), have a disclaimer that explains that the agreement is not intended nor shall it be construed to prevent an employee from exercising their rights under Section 7 of the National Labor Relations Act. [This is a similar refrain that some employers have adopted in selected policies in their handbooks on topics such as confidentiality, and social media policies.]
Remember, the scope and application of this McLaren Macomb decision and the subsequent Board guidance reaches out to employers who have (or are contemplating) offering severance agreements to employees. It does not reach out to apply to employers who have entered into such agreements with bona fide managers and supervisors as defined by the National Labor Relations Act.
Therefore, employees should review their severance agreements and practices of when and how they are used to ensure that they ensure compliance moving forward.