As discussed in our blog here, in February the National Labor Relations Board issued the McLaren Macomb decision prohibiting employers from “tendering” to employees separation or severance agreements that require employees to broadly waive their rights under the National Labor Relations Act.
Then, on March 22, the NLRB General Counsel Jennifer Abruzzo issued guidance addressing
We are pleased to share a recent HRD America article, “Severance agreements can’t include non-disparagement, confidentiality clauses,” with quotes from Michael Brewer. This article discusses the recent NLRB ruling that companies can no longer offer severance agreements that include non-disparagement and confidentiality clauses. This ruling could potentially discourage some companies from offering severance packages altogether, while other
On February 21, the National Labor Relations Board (NLRB) issued a decision in McLaren Macomb holding that employers may not offer employees separation or severance agreements that require employees to broadly waive their rights under the National Labor Relations Act (NLRA). In McLaren, a hospital furloughed 11 employees, presenting each with a severance agreement and general release that contained confidentiality and non-disclosure provisions. (See the exact provisions copied below.) The Board majority held that merely “proffering” a severance agreement containing unlawful confidentiality and non-disparagement provisions violated the NLRA because conditioning the receipt of benefits on the “forfeiture of statutory rights plainly has a reasonable tendency to interfere with, restrain, or coerce the exercise of those rights.”
At first blush, this may feel like a sweeping change requiring immediate action. However, it is important to consider this decision with a grain (or two) of salt, breathe and thoughtfully plan your next steps. The key points identified below are designed to help you think through a tailored approach for your organization¾there is not a one-size-fits-all solution. Your approach will depend on the type of workforce you have, your risk tolerance and what you are trying to protect. We are standing by, ready to assist, should you need further guidance.
Key Points
Special thanks to Scott McMillen.
Looking Ahead: Exploring the Key Themes and Recommendations for US and Global Employers in 2023
Between maintaining business continuity and keeping your workforce safe, we know there’s been little time to track the rapidly changing employment, compensation and mobility law landscape — in Illinois, across the US, and globally.
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.
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 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:
Special thanks to our summer associate Brianna Miller for her contributions to this post.
In Trinity Services Group, Inc. v. NLRB, No. 20-1014 (June 1, 2021), the US Court of Appeals for the DC Circuit recently rejected the National Labor Relations Board’s (NLRB) attempt to prohibit employers from expressing opinions the NLRB considers baseless. In reversing the NLRB, the Court held that the National Labor Relations Act (the “Act”) only prohibits employer speech containing a threat of reprisal or the promise of benefits, and that expressions which are merely “views, arguments or opinions” are not unlawful.
The case arose when an employee discovered a mix-up regarding the amount of her accrued paid leave. When she raised the issue with her supervisor, he pinned the blame on the union. The NLRB and the Court both found there was no objective basis for blaming the union rather than the employer for the mix-up.
The Court examined the provisions in Section 8(a)(1) of the NLRA, which proscribes certain speech. Section 8(a)(1) makes it unlawful for an employer to “interfere with, restrain or coerce employees” in the rights guaranteed by the Act. The Court also considered the provisions in Section 8(c) which guarantees parties freedom of speech, specifically that “[t]he expression of any views, argument, or opinion…shall not constitute an unfair labor practice.” The Court sought to reconcile the two provisions, and holding that only speech containing a threat of reprisal or promise of benefits is prohibited by the NLRA, while Section 8(c) protects “any” view, argument or opinion. The Court held the statement the NLRB found illegal contained neither a threat of reprisal or the promise of benefit and thus was not illegal. Undeterred by the plain meaning of the word “any,” the NLRB requested the Court to create an exception under Section 8(c) for statements which are “patently false.” The Court rejected that request as contrary to the plain language of the section.
Ordinarily, courts defer to the National Labor Relations Board’s (NLRB) factual findings and its remedial orders given the Board’s broad discretion when fashioning a remedy. However, in the D.C. Circuit’s recent decision in RAV Truck & Trailer Repairs Inc. v. NLRB, 997 F.3d 314 (D.C. Cir. 2021), the Court refused to do so.
Sometimes being too persuasive can have a downside, as Peter Robb, former General Counsel of the NLRB can attest. Robb had convinced the NLRB to find an owner had illegally closed his business and had further persuaded the NLRB to order it reopened. Contrary to common practice, the Court refused to rubber stamp the NLRB’s factual findings or to defer to the remedy, stating that the NLRB’s order “does not purport to explain how restoration is even factually possible.” Instead, the Court gave the NLRB a second chance at finding the necessary evidence in the now closed record.
Continue Reading DC Circuit Court Reins in NLRB: No “Rubber Stamp” of NLRB’s Findings and Remedy
A second court of appeals has refused to adopt a National Labor Relations Board (NLRB) decision declaring an employee’s speech violated the National Labor Relations Act. See Tecnocap, LLC v. NLRB, 2021 U.S. App. LEXIS 18080 (4th Cir., June 17, 2021). Similarly, in a decision issued earlier this month, the D.C. Circuit vacated an NLRB decision, finding instead it was not unlawful for an employer to make a false statement. See Trinity Servs. Grp. v. NLRB, 2021 U.S. App. LEXIS 16314 (D.C. Cir., June 1, 2021) (which we blogged about here). In Tecnocap, the Fourth Circuit deemed the NLRB’s decision out of bounds because in its view the employer’s speech “communicated accurate and lawful information,” and did not constitute unlawful “direct dealing” with its employees.
Continue Reading NLRB Loses Second Recent Speech Decision
On February 4, 2021, House Democrats reintroduced the Protecting the Right to Organize Act of 2019 (PRO Act). The sweeping labor legislation, which would return many provisions of current labor laws to their pre-1947 status, would create new claims and impose punitive penalties and strengthen a number of union and employee rights. The legislation has
President Biden did not waste any time after taking office on January 20, 2021. Shortly after the Presidential Oath of Office was administered, Biden signed 17 executive actions, which either impact the workplace or provide insight into what may be forthcoming under the new administration for employers.
Biden issued a memorandum to agencies to freeze all last-minute regulations put in motion by the prior administration as President Trump was leaving office. Notably, these regulatory “freeze memos” are not uncommon for incoming administrations to issue. This pause on the prior administration’s last-minute regulations will give the Biden administration the opportunity to evaluate the so-called “midnight regulations” and determine if they will become final, be amended, or rescinded altogether.
He also issued an Executive Order reinforcing that Title VII prohibits the federal government from discriminating on the basis of sexual orientation or gender identity. The Order references the recent Supreme Court case of Bostock v. Clayton County (blogged about here). Specifically, the Order states “[i]t is the policy of my Administration to prevent and combat discrimination on the basis of gender identity or sexual orientation, and to fully enforce Title VII and other laws that prohibit discrimination on the basis of gender identity or sexual orientation.” The Order notes that laws that prohibit sex discrimination (specifically referencing Title IX, the Fair Housing Act, and section 412 of the Immigration and Nationality Act) also prohibit discrimination on the basis of gender identity or sexual orientation.
Continue Reading Biden and the Workplace: Early Days, Major Changes
