Lauren Teukolsky’s commentary was featured this week in a Law360 article discussing the future of non-disclosure agreements (NDAs) in severance agreements in light of the National Labor Relations Board’s recent ruling in McLaren Macomb. In McLaren Macomb, the NLRB found that offering severance agreements to employees that include NDAs and non-disparagement clauses is unlawful because doing so dissuades them from engaging in employee activity that is protected by Section 7 of the National Labor Relations Act, such as discussing their working conditions or pay.
Following the NLRB’s decision, however, some attorneys have expressed skepticism that employers will tailor their severance agreements to comply with the NLRB’s ruling. Ms. Teukolsky discussed her own experience with severance agreements in California following the state’s implementation of laws to restrict the use of NDAs and non-disparagement:
“’After California passed its own restrictions, what I'm seeing is employers will continue to include very broad nondisparagement provisions, and then they'll have a carveout’ stating that nothing in the agreement is intended to violate the law, Teukolsky said. ‘And when I come back and say, 'This nondisparagement is too broad,' they say, 'Well, we have a carveout.’'"
The NLRB decision, along with the General Counsel’s memo about the decision, suggest that carveouts are not sufficient to overcome the chilling effect of NDAs and non-disparagement provisions. The memo states: “It is critical to remember that public statements by employees about the workplace are central to the exercise of employees’ rights under the Act.”
The McLaren Macomb decision is a victory for workers that should be celebrated. Employers act at their peril if they continue to include overly-broad NDAs and non-disparagement provisions in any contract they ask an employee to sign, whether it be an employment agreement signed on hire, a severance agreement offered to a laid-off employee, or a settlement agreement to settle claims that have been filed.
To read the article in its entirety, click here. If you have questions about a severance agreement you’ve received and want to get in touch with our office, click here.
On February 22, the NLRB (National Labor Relations Board) ruled that severance agreements preventing laid-off employees from making publicly disparaging statements about their employer are generally illegal. The NLRB also ruled that severance agreements may not include blanket confidentiality provisions that prevent employees from speaking with anyone else about the terms of the agreement. The ruling overturns a 2020 decision by the then Republican-controlled board that found such agreements were not illegal on their face.
The NLRB is a federal agency tasked with safeguarding employees’ rights and preventing unfair labor practices. The Board’s five members are appointed by the President. During President Biden’s administration, the Democratic-controlled Board’s rulings have largely been worker- and union-friendly.
Wednesday’s ruling is important because it reinstates what until 2020 had been a “longstanding precedent” preventing corporations from asking laid-off employees to waive rights under the National Labor Relations Act in order to receive severance. Under the Board’s recent ruling, employers may no longer withhold severance to silence employees and prevent them from publicly discussing abuses at the workplace, including sexual harassment and assault. Severance agreement clauses preventing employees from discussing workplace misconduct are frequently referred to as “gag” clauses.
Lauren Teukolsky has reviewed severance agreements and fought for workers’ rights for over 20 years. If you believe you have received an illegal severance agreement, click here to get in touch with our office.
Lauren Teukolsky is the founder and owner of Teukolsky Law, A Professional Corporation.