A good separation agreement brings closure to an employment situation.  In exchange for some form of compensation, an employee agrees to waive all claims against its employer and agrees not to say anything bad about them.  However, according to a recent decision from the National Labor Relations Board (“NLRB”), broad confidentiality, non-disclosure, and non-disparagement clauses that employers include in severance agreements with lower-level employees may violate of Section 8 of the National Labor Relations Act (“the Act”).

In McLaren Macomb, the employer offered a severance agreement to 11 bargaining unit employees it permanently furloughed.  In the agreements, the employees were “broadly prohibited” from making statements that could disparage or harm the image of the employer and further prohibited them from disclosing the terms of the agreement.  The agreement also provided for monetary and injunctive relief against the employees if they shared any information about the agreement.  In addition, the employer allegedly gave the employees’ union no notice that it was furloughing the employees and did not give it an opportunity to bargain the impacts.  The Board found the employer violated section 8(a)(5) and (1) of the Act by not bargaining the impacts of the furlough.

With regard to the severance agreement, the Board overruled a previous decision of the Board from the previous administration, and reintroduced a standard pertaining to severance agreements from more left-leaning Boards.  In analyzing the agreements, the Board focused on the language of the severance agreement to determine “whether proffering the agreement had a reasonable tendency to interfere with, restrain, or coerce employees’ exercise of their Section 7 rights.”

In its decision the Board held that “whether an employer harbors animus against Section 7 activity is irrelevant to the long-established objective test for determining whether…the Act is violated.”  The Board relied on the long-established precedent that agreements that restrict employees from engaging in activity protected by the Act are unlawful.

With regard to the language of the agreement, the Board stated, “Public statements by employees about the workplace are central to the exercise of employee rights under the Act.”  The language of the agreement provided no definition of disparagement, and encompassed employee conduct regarding any labor issue, dispute, or term and condition of employment.  The broad language was found to have “a clear chilling tendency on the exercise of Section 7 rights by the subject employee.”  The Board stated language would also prohibit employees from discussing terms of the settlement with co-workers who might face similar decisions in the future.

In short, the duration and scope of the severance agreement were far too broad and took away too many employee rights.  As a result of its actions, the employer was required to bargain over the furlough, reinstate the furloughed employees, and make them whole for any loss of earnings and benefits.

While separation agreements can be useful, they must be narrowly tailored so as not to infringe on employee rights.  When drawing up agreements, employers must be mindful that even if the employee is no longer going to be employed, they still have rights under the Act.  If you, or your organization, need assistance in writing, or modifying separation agreements with your employees, contact Wiley Reber Law, for legal advice that works.