Our four-part Navigating the World webinar series features US moderators welcoming Baker McKenzie colleagues from around the globe as they share the latest labor and employment law updates and trends. In this session, US-based multinational employers
Our four-part Navigating the World webinar series features US moderators welcoming Baker McKenzie colleagues from around the globe as they share the latest labor and employment law updates and trends. In this session, US-based multinational…
Across the world, trade secrets are becoming increasingly important. As companies align workforce transformation, manage supply chain operations and balance the needs of their digital transformation journey, new strategies are required for the identification, protection and enforcement of their most valuable, complex and market-differentiating trade secrets.
In this series of bite-sized videos, hear from Baker…
Pay transparency laws (laws requiring employers to disclose compensation ranges to applicants) are spreading like wildfire across the US. Regulators are hoping such laws eliminate pay differentials based on gender or race. Putting good intentions aside, the laws are a source of huge consternation for businesses as the state and local requirements vary greatly in…
Nondisparagement clauses have long been a staple in settlement agreements between employers and employees as a way to discourage disgruntled employees from debasing the company after they have departed. Nondisparagement clauses often require employees to refrain from saying anything negative about their former employer at all. But employers should keep a few things in mind to ensure that the use of a nondisparagement clause does not create additional risk for the company.
Keep an Eye Out for Activity by the National Labor Relations Board (NLRB)
The NLRB has signaled it may revisit current Board precedent holding nondisparagement agreements in employee settlement agreements are legal-meaning employers should watch out for Board action or decisions reverting to restrictions on nondisparagement agreements. On August 12, 2021, in her first memo as NLRB General Counsel, Jennifer Abruzzo issued a Mandatory Submissions to Advice Memorandum, setting forth that NLRB Regional Directors, Officers-in-Charge, and Resident Officers must submit certain types of cases to the NLRB Division of Advice (“Advice”) (which, in addition to other duties, provides guidance to the NLRB’s Regional Offices regarding difficult and novel issues arising in the processing of unfair labor practice charges).
Abruzzo identified 11 areas of Board case law involving doctrinal shifts from previous Board precedent that the Board, through submissions to Advice, would be examining-including “cases finding that separation agreements that contain…nondisparagement clauses…lawful.”
Abruzzo highlighted cases involving the applicability of Baylor University Medical Center, 369 NLRB No. 43 (2020), overruling Clark Distribution Systems, 336 NLRB 747 (2001), and International Game Technology, 370 NLRB No. 50 (2020) to be submitted to Advice for review.
Before it was overruled, Clark Distribution Systems stated that a provision in the confidentiality clause of a severance agreement prohibiting the employee from voluntarily appearing as a witness, voluntarily providing documents or information, or otherwise assisting in the prosecution of any claims against the company unlawfully chilled the employees’ Section 7 rights under the National Labor Relations Act (NLRA)(which guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.”)
The provisions at issue in the severance agreements in Baylor University Medical Center included a “No Participation in Claims” provision in which the departing employee agreed not to assist or participate in any claim brought by a third party against Baylor (unless compelled by law to do so), and a “Confidentiality” provision in which the employee agreed to keep confidential any of Baylor’s confidential information made known to the employee during their employment. The complainants alleged that by offering the severance agreements with these provisions, Baylor violated Section 8(a)(1) of the NLRA (which makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the Act). The Board disagreed, in part because the severance agreement only pertained to postemployment activities having no impact on terms and conditions of employment. The Board also found that Baylor’s mere offer of the separation agreement was not coercive or otherwise unlawful, and that there was no sign that the agreement was offered under circumstances that would tend to infringe on the separating employees’ exercise of their own or their co-workers’ Section 7 rights.
International Game Technology (IGT) applied Baylor to a separation agreement with a nondisparagement clause, finding in that case that the severance agreement at issue was entirely voluntary, did not affect pay or benefits that were established as terms of employment, and was not offered coercively-and the nondisparagement provision did not tend to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights under the Act.
What to do?
What should employers do now given the NLRB review of cases applying Baylor and International Game Technology to ensure they don’t run afoul of the NLRA when using nondisparagement clauses in settlement agreements with employees? Employers should:
- Keep an eye out for changes in the law stemming from the NLRB’s review of cases applying Baylor and International Game Technology.
- Use precise language to make it clear that a nondisparagement clause only applies at the time of and after termination, to avoid claims that the terms of the clause interfere with an employee’s Section 7 rights under the NLRA.
- Consult with counsel regarding the possibility of using a savings clause stating that the severance agreement, and specifically the nondisparagement clause, are not intended to prevent the employee from engaging in protected activity under the NLRA.
Join us for a four-part webinar series as our US moderators welcome colleagues from around the globe to share the latest labor and employment law updates and trends. US-based multinational employers with business operations in Europe, the Americas, the Middle East and Africa, and Asia Pacific regions will hear directly from local…
We are pleased to share a recent Bloomberg Law article, “How Employers Can Keep ‘Me Too’ Evidence From the Jury,” which provides guidance for employers to keep “me too” evidence—not to be confused with the #MeToo movement—out of trial. This evidence, which is from parties not involved in the litigation, can taint the jury and …
Employers across the U.S. are requiring employees to return to the brick and-mortar workplace as COVID-19 cases drop, and they are looking forward to having employees work together again face to face.
But employers beware: employees have had little in-person interaction with their colleagues over the past two years, and some employees who were onboarded …
Many thanks to our colleague in London, Julia Wilson, for co-presenting.
An influx of high profile whistleblowing cases have made headlines in recent years, and claims (and awards) are on the rise. At the same time, more defined and greater protections for whistleblowers are coming into play in the US, UK and…
New state and federal limits on post-employment restrictive covenants mean employers must stay on top of more than just vaccination policies or the logistics of office reopenings. The swath of new and on-the-horizon legislation aimed at limiting the enforceability of post-employment non-compete agreements deserves employers’ attention too. Part One of our blog post series on restrictive covenants addressed the intersection of remote work and state non-compete laws. Now, in Part Two, we summarize recent updates to state non-compete laws, pending state legislation that could impact non-competes, and new federal-level activity aimed at limiting non-competes.
Colorado recently raised the stakes for violations of its non-compete law. Effective March 1, 2022, under SB 21-271, a person who violates Colorado’s non-compete statute commits a class 2 misdemeanor.
Colorado’s non-compete statute (C.R.S. section 8-2-113) voids agreements that restrict trade, such as non-competition and non-solicitation of customers covenants, unless they fall within a specific statutory exception: (i) a contract for the purchase or sale of a business or its assets; (ii) a contract for protecting trade secrets; (iii) a contract provision recovering education or training expenses associated with an employee who has been with an employer for less than two years; or (iv) a restriction on executive or management personnel or each of their professional staff. As of March 1, 2022, a person who violates this statute commits a class 2 misdemeanor punishable by up to 120 days in jail and / or a fine of up to $750.
Many questions remain about the enforcement of this amendment, such as who will face ultimate liability for the employer (e.g., in-house counsel, HR staff, line managers, etc.). And though there is no indication that the new law is retroactive, Colorado employers were subject to criminal penalties for a violation of Colorado’s non-compete law even prior to SB 21-271 being passed, under C.R.S. section 8-2-115. SB 21-271 repealed C.R.S. section 8-2-115 while simultaneously inserting language into the non-compete statute itself making a violation a class 2 misdemeanor. It remains to be seen whether this is simple statutory consolidation, or a signal that Colorado plans to increase enforcement of violations of its non-compete statute. Employers should review their non-compete agreements and internal policies regarding which employees are required to sign such agreements to make sure they are in compliance with this new law.…