NLRB Prohibits Broad Confidentiality and Non-Disparagement Provisions in Severance Agreements for Certain Employees

The recently reconstituted National Labor Relations Board’s (NLRB) decision in the matter of McLaren Macomb (372 NLRB No. 58) prohibits broad confidentiality and non-disparagement provisions in severance agreements for non-supervisory employees. 

The February 21, 2023 decision held, among other things, that such provisions were unlawful because they “interfere[d] with, restrain[ed], and coerce[d]” employees in connection their protected rights under the National Labor Relations Act. Prior to this, well-settled Board law permitted the use of non-disparagement and confidentiality provisions in severance agreements absent evidence of separate unlawful conduct on the part of the employer.  

The Board’s momentous decision in McLaren Macomb impacts the manner in which almost every employer nationwide will be required to rethink and modify the provisions of its severance agreements, given that, in addition to an employee’s waiver and release of claims, one of the major inducements for any employer to provide severance pay is to “buy” an employee’s silence with respect to both (i) the publication of material which could be deemed disparaging to the employer, its management team or its products and services, and (ii) the terms and conditions of the severance agreement itself. Employers should thus exercise prudence in the form of any agreement provided to an individual or group to whom severance benefits are to be granted in consideration for a waiver and release of claims.  

Read more about the NLRB decision in our Client Alert.