New-Act-Prohibits-Confidentiality-in-Severance-Agreements

New Act Prohibits Confidentiality, Non-Disparagement Provisions in Severance Agreements

By Liz Hartsel

On February 21, 2023, the National Labor Relations Board (NRLB) issued a decision that confidentiality and non-disparagement agreements in employment severance agreements may be deemed unlawful under the National Labor Relations Act (the “Act”) if they interfere with an employee’s right to discuss working conditions as guaranteed by Section 7 of the Act.
 
In McLaren Macomb, 372 NLRB No. 58 (2023), the NLRB determined that simply offering a separation agreement with the following two provisions, which are common in severance agreements, violated the Act: 

  • 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.
  • 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.

In light of McLaren Macomb, employers should take a second look at their severance agreements to ensure that any agreement with confidentiality and/or non-disparagement provisions also contain express reservation of rights sections protecting an employee’s right to engage in activity protected under the Act.
 
Fortis recommends that you reach out to an employment attorney now to ensure that your separation agreement does not violate the Act.

Share:

Unlock the Power of Legal Solutions with Fortis Law Partners

Help us better understand your legal needs.

Relevant Industry & Services: