The National Labor Relations Board (NLRB) recently ruled that language commonly used in severance agreements is unlawful. The Board stated these provisions conflict with ex-employees’ rights to discuss the terms and conditions of their employment with others. Their February decision hasn’t been appealed as of this writing, but it probably will be. https://kingstonlawgroup.com/federal-agency-rules-hush-money-payment-in-a-severance-agreement-is-unlawful/

1. “Insert Article
Title”
“Federal Agency Rules Hush Money
Payment in a Severance Agreement
is Unlawful”

2.  What is the National Labor Relations Board?
 What Did the NLRB Decide?
 Does This Apply to Me?
 What Can Employers Legally Do With
Severance Agreements?

3. ● The National Labor Relations Board (NLRB)
recently ruled that language commonly
used in severance agreements is unlawful.
● The Board stated these provisions conflict
with ex-employees’ rights to discuss the
terms and conditions of their employment
with others.
● Their February decision hasn’t been
appealed as of this writing, but it probably
will be.

4. What is the National Labor Relations Board?
● The NLRB, according to its website, is an independent
federal agency. Its purpose is to protect employees from
unfair labor practices by employers.
● It protects private sector workers’ rights to join together,
with or without a union, to engage in collective action to
improve their wages, benefits, and working conditions.
● Employees can file complaints with the NLRB if they feel
their employer or union violated the federal National
Labor Relations Act (which the agency enforces).
● There are layers of investigations and adjudications
within the agency. Their final decisions can be appealed
in the federal court system.

5. What Led to This Decision?
● The employer at issue is McLaren Macomb Hospital in
Michigan. Some of its registered nurses belong to a
union, according to the NLRB decision.
● Eleven members were laid off in 2020 and signed a
severance agreement offered by management. The
hospital didn’t tell the union about its plans for layoffs,
that it was offering a severance agreement, nor did it
disclose its contents.
● An NLRB judge ruled the hospital violated the NLRA by
laying off these union members without first notifying the
union and allowing it to bargain about that decision and
its impact.

6. ● The decision was appealed through the Agency, and a
majority of the Agency’s Commissioners (those in charge
of the NLRB) approved the ruling but reversed the finding
that certain of the agreement’s clauses were legally
correct.
The problematic language is:
6. Confidentiality Agreement. The Employee
acknowledges that the terms of this Agreement are
confidential and agrees not to disclose them to any
third person other than spouse, or as necessary to
professional advisors for the purposes of obtaining
legal counsel or tax advice, or unless legally compelled
to do so by a court or administrative agency of
competent jurisdiction.

7. 7. Non-Disclosure. At all times hereafter, the Employee
promises and agrees not to disclose information,
knowledge or materials of a confidential, privileged, or
proprietary nature of which the Employee has or had
knowledge of, or involvement with, by reason of the
Employee’s employment. At all times hereafter, the
Employee agrees not to make statements to
Employer’s employees or to the general public which
could disparage or harm the image of Employer, its
parent and affiliated entities and their officers,
directors, employees, agents and representatives.
● This case is an example of the power of government and
our legal system. A case involving eleven laid-off
employees and a hospital in Mount Clemens, Michigan,
may impact tens of millions of workers nationwide.

8. What Did the NLRB Decide?
Two of the three Commissioners found it’s illegal for an
employer to offer a severance agreement that includes
broad non-disparagement and confidentiality provisions to
a worker facing separation.
The clauses were deemed illegal because they infringed on
employees’ NLRA rights. They:
 Limit employees’ ability to discuss their wages, hours,
and working conditions (which may include
disparaging remarks) with other employees
 Prevent employees from helping other employees
seek assistance
 Hinder employees from seeking aid from the NLRB,
unions, and other outside organizations

9. The Board decided these clauses were illegal because they
broadly prohibited employees from discussing wages,
working conditions, and labor disputes.
They could also prevent employees from:
 Criticizing their employer
 Complaining about their current or former
workplace
 Cooperating with a government investigation
 Participating in NLRB proceedings
 Supporting other employees in these activities

10. What Can Employers Legally Do With
Severance Agreements?
A month after the decision, NLRB General Counsel Jennifer
Abruzzo published a memo laying out the Agency’s position
on its impact on employers and employees. She stated:
 Narrow language that restricts the discussion of
proprietary or trade secrets for a limited period based
on legitimate business reasons may be legal
 Narrowly worded, justified, non-disparagement
provisions that ban defamation may be lawful. Abruzzo
defines defamation as maliciously untrue statements
made with knowledge that they’re false or with reckless
disregard for their truth

11.  Non-disparagement clauses protecting too many parties
would not be considered legal, like covering “all
disputes, terms and conditions, and issues, without a
temporal limitation and with application to [corporate]
parents and affiliates and their officers, representatives,
employees, directors and agents”
 Abruzzo claims the holding applies to all employee-
employer communications, not just severance
agreements
 Management employees could be covered by this
decision and protected by the NLRB if they’re retaliated
against for their opposition to an employer violating, or
attempting to violate, workers’ rights or participating in
an investigation into such allegations

12. “Insert Article
Title”
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