As more companies consider reductions in workforce due to economic volatility, the National Labor Relations Board (NLRB) issued a decision calling into question the legality of certain provisions found in many separation agreements. On February 21, 2023, the McLaren Macomb decision held that it is illegal for severance agreements to contain broad confidentiality provision or broad non-disparagement agreements.

The NLRB Board determined that such provisions could result in requiring employees to waive their Section 7 rights under the National Labor Relations Act (NLRA), and merely offering agreements with these provisions violated the NLRA regardless of whether the employee accepted the terms or whether the employer even attempted to enforce the terms. The NLRB felt that the mere presence of the clauses could have a chilling effect on a laid-off employee’s right to raise concerns with the NLRB, assist the NLRB with an investigation, make public statements about the workplace, or assist other employees who are still employed at the company to exercise their rights under the NLRA. All of these are rights protected under Sections 7 of the NLRA.

The decision has broad impact on whether companies should include confidentiality or non-disparagement clauses in workplace agreements. Employees of most private employers are subject to the protections of Section 7 regardless of whether they are unionized. While the matter at hand dealt with a separation agreement, the decision could have implications for other workplace documents such as offer letters, employee handbooks, or proprietary interest agreements if they include similar non-disparagement or confidentiality clauses. Furthermore, while the decision leaves open the ability to allow for these types of clauses, if narrowly drafted, the decision does not give any guidance on how to draft clauses to survive NRLB review. It’s important that employers proceed cautiously and consult with legal counsel before including these clauses in the future.

With the potential for widespread reductions in force at many employers, it is important to consult your employment counsel for advice on how to respond to this new ruling.