The National Labor Relations Board has ruled that severance agreements cannot prevent terminated employees from making disparaging statements about their former employer or disclosing the agreement’s terms.
In its ruling, the board overturned two decisions made during the Trump administration. The NLRB found that the previous decisions had departed from precedent and violated workers’ rights of the National Labor Relations Act’s Section 7, which allows workers to communicate when self-organizing.
The board stated that offering a severance agreement that requires employees to give up their rights is an attempt to discourage the exercise of statutory rights. Employers cannot require employees to forego these rights in exchange for benefits.
According to the board, the non-disparagement provision in this case lacked specific limitations, such as a temporal restriction or a definition of what constitutes “disparagement.”
The board’s greatest concern in its decision was in preserving employees’ rights to engage in protected union activity. The board noted that non-disparagement provisions might possibly be enforceable, however, they would need to explicitly permit employees to engage in Section 7 activity, file unfair labor practice charges, help others in doing so, and cooperate with the NLRB’s investigative procedures.
What does this mean for employees receiving severance agreements today?
Employers will likely continue drafting severance agreements with non-disparagement provisions, however, they will permit employees to engage in the union activities discussed in the NLRB’s decision. The board noted the possibility of permissible non-disparagement provisions, as long as they have safeguards, narrowly defined limitations, and explicit permissions to engage in these union activities.
Employees with existing severance agreements may want to continue abiding by any non-disparagement terms. While most severance agreements may contain provisions that would now be considered coercive, not all of them will be immediately invalidated by this decision.
For example, the rules limit workers from filing charges related to violations that occurred more than six months ago. Also, if the severance agreement was drafted when such provisions were permissible, then this may be a potential defense against any complaint.
The NLRB General Counsel typically issues guidance following decisions with significant impact. Potomac Legal Group will continue following these changes and keep clients informed of their rights. For now, each severance agreement and non-disparagement provision will need to be carefully scrutinized.
Severance agreements have acceptance deadlines. If you have recently received a severance agreement, contact Potomac Legal Group to schedule a severance review and consultation before the agreement expires.