NLRB Issues McLaren Macomb Decision Preventing a Broad Waiver of Rights in Severance Agreements
May 15, 2023 | Anna N. Self
On February 21, 2023, the National Labor Relations Board issued a decision in McLaren Macomb, preventing employers from imposing a broad waiver of rights on employees through severance agreements. Specifically, non-disparagement and confidentiality provisions with a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights under the National Labor Relations Act (NLRA) were deemed unlawful by the Board and, as a result, unenforceable.
In Macomb, eleven union employees were permanently furloughed from their employment at a hospital. Each employee was offered differing severance benefits if they agreed to the terms of a severance agreement. Consequently, in these agreements the employees were prohibited from making “statements to [other hospital] employees or to the general public which could disparage or harm the image of the Employer” and, additionally, were prohibited from disclosing the terms of their respective severance agreements to any third party.
Under the NLRA, public statements from employees about the workplace are central to employee rights and, as such, the Board determined using a non-disparagement provision to ban employee conduct regarding any labor issue, or dispute was a breach of those rights. Here, the non-disparagement provision was overly broad banning public comment regarding the employees’ “Employer,” which included all affiliates, parents, officers, directors, etc. of the hospital. Further, the hospital failed to establish a finite term for the provision itself, instead it was to be imposed indefinitely.
In the confidentiality provision, employees were prohibited from disclosing the terms of the severance agreements to any third party, including the Board, and other employees. This prohibition prevented the furloughed employees from supporting their coworkers right to discuss the agreements should they find themselves in a comparable circumstance and prevented the employees from reaching out to the Board to protect their statutory rights under the NLRA. The Board determined precluding employees from exercising these rights was unlawful.
Both the non-disparagement and confidentiality provisions were not enforced by the Board as the provisions failed to be narrowly tailored with respect to the rights provided by the NLRA. As a reminder, the NLRA is not applicable to supervisors. This means mangers, executives, and other senior personnel will not be affected by the Macomb decision. Currently, the courts have not provided any definitive rulings on Macomb, but the decision could still be subject to review in federal court in the future. Employers must weigh the risks associated with having broad confidentiality and non-disparagement provisions in severance agreements and other polices as employees are now more likely to win such cases if they are brought to the attention of the National Labor Relations Board.