In a decision issued Feb. 21, 2023, the National Labor Relations Board (NLRB) set a new precedent regarding confidentiality provisions. The McLaren Macomb case involved furloughed employees that were offered a severance agreement containing non-disparagement language that prohibited them from making negative statements about the employer. The agreement also contained a confidentiality provision that prohibited the employees from discussing the terms of the agreement itself.
The Board determined that the language in these two sections had the effect of limiting employees’ rights under Section 7 of the National Labor Relations Act, which governs employees’ right to unionize and bargain collectively. The Board’s decision reverses precedent previously set by two cases in 2020.
Board ruling on confidentiality provisions in severance agreements
The Board ruled that employers cannot offer severance agreements to employees with broad non-disparagement and/or confidentiality provisions. Section 7 and, thus, the Board’s decision, applies to unionized and non-unionized employees alike. However, it does not apply to those employees who would be considered supervisors under the Act.
It is important to note that the non-disparagement and confidentiality provisions analyzed by the Board did not contain language making it clear that the employee could still exercise their Section 7 rights. As of now, it is unclear if employee agreements containing Section 7 disclaimers would be enforceable. However, until the Board addresses the issue in a future decision or in guidance, employers should take care to review the non-disparagement and confidentiality provisions in employee agreements and ensure they do not restrict employees’ Section 7 rights.