The nature of the rules that to protect both employees and employers from future litigation is everchanging. Not a day goes by in my practice as an employment attorney where I read a new rule or decision and don’t have to ask myself: “How does this impact the balance of obligations between employer and employee?

A February 21, 2023, National Labor Relations Board (“NLRB”) decision reopens the door to what some believe is the original intent of the National Labor Relations Act. Put simply, in McLaren McComb, 372 NLRB No. 58, the NLRB returned to a formerly longstanding position that employers could not put overly broad confidentiality provisions and non-disparagement agreements in employee severance agreements.

“Inherent in any proffered severance agreement requiring workers not to engage in protected concerted activity is the coercive potential of the overly broad surrender of NLRA rights if they wish to receive the benefits of the agreement.”[1] Whether or not that applies to employee settlement agreements is an area still under active consideration in the wake of the one-month-old decision.

Severance agreements are not wholesale illegal, they are now subject to more close scrutiny, likely in favor the employee. The McLaren decision has narrowed an employer’s ability to put overly broad confidentiality agreement and non-disparagement agreements into an employee severance agreement.

Put simply, non-disparagement agreements and overly broad confidentiality should now be a product of the past. The NLRB opined that these types of provisions required employees to give up certain fundamental rights in exchange for receiving the benefits of a severance agreement.

While this precedent is in its infancy, the questions that this decision bring to employment law–both on the employee and employer side–are robust and challenging. First, to what extent does this apply to private sector employers? Are there certain employees that will be exempt as they are not defined as “employees” under the National Relations Act? And finally, the question I fear the most – will employers offer fewer employee severance agreements as a result of this decision?

While the decision appears to expand employee rights – will employers be less willing to issue severance upon termination/resignation? Employment attorneys now have some guidance, in addition to a whole new worldview of confidentiality and non-disparagement. 

On March 24, 2023, NLRB General Counsel Jennifer Abruzzo provided some guidance. GC Memo 23-05 (the “memo”) begins the first attempt to instruct employment attorneys, employees and employers alike on responding to inquiries “about implications stemming from” the McLaren decision. While the memo does not create the law, it appears to be, at first glance, an attempt to discuss further protections to come. Will we soon be facing an era where non-competition and non-solicitation agreements are on the chopping block next?

For more information on your rights as an employee, or new obligations placed on employers please contact Chelsea Brener Cusimano at cbc@snw.law.

[1] McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, International Union (OPEIU), AFL–CIO. Case 07–CA–263041.