New NLRB Guidance: Employers Cannot Require Broad Waivers in Severance Agreements
As of March 22, 2023, the National Labor Relations Board (NLRB) has issued new guidance on the use of severance agreements in employment relationships. In a memo sent to all field offices, NLRB General Counsel Jennifer Abruzzo clarified that employers cannot require employees to waive their rights under the National Labor Relations Act (NLRA) in order to receive severance benefits.
The NLRB found the language was overly broad saying, “The severance agreement at issue in the case contained overly broad non-disparagement and confidentiality clauses that tend to interfere with, restrain or coerce employees’ exercise of Section 7 rights. Specifically, the non-disclosure provision contained a non-disparagement clause that advised the employees that they are prohibited from making statements that could disparage or harm the image of the employer, its parent and affiliates, and their officers, directors, employees, agents and representatives. And, the confidentiality clause advised employees that they are prohibited from disclosing the terms of the agreement to anyone, except for a spouse or professional advisor, unless compelled by law to do so.”
This decision has significant implications for both employers and employees, as many severance agreements contain provisions that restrict employees' rights to engage in protected concerted activities or access the NLRB. These provisions can include confidentiality clauses, non-disclosure agreements, and non-disparagement clauses.
According to the memo, lawful severance agreements can still be offered and enforced, as long as they do not contain overly broad provisions that infringe upon employees' rights to improve their working conditions through collective action. However, if a severance agreement violates the NLRA by limiting employees' future rights, it will not be enforceable.
Employers should take note of this new guidance and review their severance agreements to ensure that they do not contain any provisions that violate the NLRA. It is important to consult with legal counsel to ensure that all severance agreements comply with applicable laws and regulations.
