Caution: Your Standard Severance Agreement May Now Violate The NLRA

On February 21, 2023, the National Labor Relations Board (the “NLRB”) released its decision in McLaren Macomb,[1] which significantly restricts employers’ ability to include broad confidentiality and non-disparagement provisions in employee severance agreements. Reversing recent NLRB precedent under Baylor University Medical Center,[2] and IGT d/b/a International Game Technology, [3] the NLRB held that merely offering an employee a severance agreement with standard non-disparagement and confidentiality provisions restrains and coerces the employee in his or her exercise of rights afforded to them under the National Labor Relations Act (the “Act”) and is, therefore, unlawful.

In McLaren Macomb, the administrative judge found that certain actions of the employer were unlawful with respect to eleven furloughed employees who were presented with, and who signed, severance agreements, but the administrative judge also determined that, under Baylor and IGT, the employer’s proffering of the severance agreements, with their broad non-disparagement and confidentiality provisions, did not violate the Act.  Upon subsequent review, however, the NLRB reversed the administrative law judge’s findings in part and held that the proffering of the severance agreements was unlawful under the Act.

In particular, the severance agreements required the employees to release the employer from any claims arising out of their employment, or the termination of such, and further broadly prohibited the employees from disparaging the employer and required the employees to keep the terms of the agreement confidential. The NLRB held that such provisions interfered with, restrained or coerced employees’ exercise of their rights under the Act and, because the severance agreements conditioned the receipt of benefits upon acceptance of those unlawful provisions, the mere proffering of the severance agreements violated the Act.

Under McLaren Macomb, no showing of actual coercion is required. The mere proffer of an agreement which conditions receipt of severance benefits on the forfeiture of an employees’ right to engage in communications with a wide range of third parties[4] violates the Act, because such has a “reasonable tendency to restrain, coerce, or interfere with the exercise of Section 7 rights by employee, regardless of the surrounding circumstances.” Id. at 7.

Although the employees in McLaren Macomb were union employees, it is important to note that the Act applies to employers of both unionized and non-unionized employees.  All employers, therefore, need to carefully review their standard severance agreements to ensure compliance with the Act and McLaren Macomb.



[1] 372 NLRB No. 58 (2023)

[2] 369 NLRB No. 43 (2020)

[3] 370 NLRB No. 50 (2020)

[4] Such communications, however, cannot be so disloyal, reckless, or maliciously untrue to lose the Act’s protection. Id. at 6.

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