3/29/23: NLRB General Counsel Issues Guidance Memorandum on Severance Agreements
March 29, 2023
The National Labor Relations Board (NLRB) Office of the General Counsel (GC) recently issued a memorandum providing guidance on how it is interpreting the Board’s recent opinion in McLaren Macomb. Check out our previous E-Alert on the McLaren Macomb decision here. The GC’s Memorandum does not carry the force of law, but it is important for employers to be aware of how the GC’s office intends to prosecute cases in light of the recent NLRB decision. In McLaren Macomb, the NLRB ruled that non-disclosure and non-disparagement provisions in agreements with employees will be unlawful if they restrain an employee’s exercise of their National Labor Relations Act (NLRA) Section 7 rights. The NLRB emphasized that employers offering such unlawful terms to an employee would be an unfair labor practice, and entering into an agreement with unlawful provisions would be a separate unfair labor practice.
Most importantly, the GC believes that McLaren Macomb has retroactive effect, meaning that it renders agreements entered into prior to the decision unlawful. Furthermore, the GC’s position is that an employee being bound by an agreement containing such unlawful provisions is a continuing violation and will not be barred by the usual six-month statute of limitations for unfair labor practice charges. The memorandum even suggests that employers may be required to notify former employees who signed severance agreements containing unlawful provisions.
The GC indicates that provisions imposing a duty of confidentiality for trade secrets or proprietary information should be lawful; however other restrictions of an employee’s right to disclose the terms and conditions of their employment remain unlawful. The memorandum reiterates the McLaren Macomb decision’s warning that non-disparagement provisions should not limit employee speech unless it is maliciously or recklessly defamatory.
The GC notes its opinion that a disclaimer in an agreement will not necessarily render overbroad provisions lawful. Overbroad provisions, even with a disclaimer that clearly spells out that Section 7 rights are not being restricted, could still have a chilling effect that compels an employee not to exercise such rights. Therefore, the GC views them as unlawful.
The memorandum clarifies that agreements containing unlawful provisions are not entirely void; rather, only the unlawful provisions will be void. The GC’s memorandum provides the caveat that other circumstances may justify completely voiding an entire agreement.
While supervisors cannot be bound by terms that would prevent them from cooperating in NLRB investigations or proceedings, they may be bound by broader confidentiality and non-disparagement restrictions than employees.
Many Oregon and Washington employers are wary of testing the limits of non-disparagement and confidentiality, given that they are already limited in their ability to utilize such provisions in severance and settlement agreements. As such, employers should ensure their agreements with employees are drafted in consideration of the most up-to-date guidance available.
For questions regarding severance agreements or compliance with the NLRA, contact the Barran Liebman team at 503-228-0500.
