Employees who are terminated or laid off are sometimes offered severance pay in exchange for making certain promises to their employer and/or giving up certain rights. But a new ruling by the National Labor Relations Board (NLRB) limits the restrictions that employers can place on employees through severance agreements. Specifically, employers can no longer prohibit employees from discussing the terms of the severance agreement with others or from making potentially disparaging statements about the employer.
The NLRB ruling
On February 21, 2023, the NLRB ruled in McLaren Macomb that employers cannot require terminated employees to waive their rights under Section 7 of the National Labor Relations Act (NLRA) in exchange for receiving severance pay. The case involved 11 Michigan surgical center workers who were furloughed when the center was closed due to the pandemic. The NLRB held that offering a severance agreement containing confidentiality and non-disparagement provisions is unlawful because it could deter workers from exercising their legal rights, including the right to talk with co-workers or others about the terms of their severance agreements, their compensation, and other working conditions.
“It’s long been understood by the board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights,” NLRB Chairman Lauren McFerran said in a statement announcing the decision.
The ruling restored long-standing precedent and reversed two 2020 NLRB decisions which held that severance agreements containing confidentiality and non-disparagement provisions were only unlawful when connected to other unlawful employer conduct.
How the ruling may impact your severance agreement
The ruling went into effect immediately and impacts severance agreements of employees covered under Section 7 of the NLRA, which includes most private-sector, non-managerial employees, regardless of whether or not they are members of a labor union.
If you are offered a severance agreement, it is important to understand your rights. If you are covered under Section 7, your employer is prohibited from conditioning your severance payment on your promise to not discuss the terms of the agreement with others or make statements that could harm the employer’s image. If your severance agreement contains those requirements, consult with an employment attorney to determine your rights and options.
Protect your rights
If you are offered or recently signed a severance agreement and you are unsure of your rights and responsibilities under the agreement, you can help protect yourself by discussing the matter with an experienced employment attorney. Contact Katz Melinger PLLC at 212-460-0047 or online.
