NRLB reverses a decision
The National Labor Relations Board (NRLB) disagreed with an administrative law judge that certain severance agreement terms were lawful. The Board reversed its decision in the case McLaren Macomb. Its finding was that even offering a severance agreement containing overly restrictive terms would be an unfair labor practice.
What are details regarding restrictions on severance agreements changed?
Being offered an unlawful severance agreement is enough to bring a complaint against an employer. Previously the rule was that signing an unlawful severance agreement was necessary to bring a complaint.
How did the decision affect confidentiality and non-disparagement provisions?
A confidentiality agreement binds one or more parties to non-disclosure of information considered to be confidential or proprietary. In general, the NLRB opposes confidentiality provisions but would allow them if:
- Narrowly tailored
- Restricting the dissemination of proprietary or trade secret information
- For a limited time period
- Based on legitimate business justifications
How did the decision affect non-disparagement provisions?
The legal term disparagement refers to publicizing derogatory statements that are false and harmful regarding a business, product or another’s property. Non-disparagement provisions would prevent disparagement. Concessions made for non-disparagement provisions were if they were:
- Limited to employee statements about an employer if they met the definition of defamation
- Maliciously untrue
- Made with knowledge of their falsity
- Made with reckless disregard for their truth or falsity
The NLRB also would not provide protections to supervisors when offered overly broad severance agreements. An example would be an agreement preventing them from participating in an NLRB proceeding.
Reference: JD Supra
As an employer, do you have legal questions about restrictive clauses in severance agreements?
If you have questions, arrange a consultation with an experienced employment defense lawyer. It is wise to ensure your severance packages comply with recent NLRB decisions about restrictive provisions. Call Stephen D. Hans & Associates, P.C. at (718) 275-6500.