News and Updates
Category: Severance
March 2023 Legal Update
NLRB Rules Severance Can’t Be Contingent on NDA In the realm of HR, both severance pay and non-disclosure agreements (NDAs) are subjects that come up often. Employers are permitted utilize both - but they can’t be mutually exclusive, according to a recent ruling by the National Labor Relations Board (NLRB) in McLaren Macomb. Employers tying NDAs to severance packages may need to make some adjustments. Offering severance in exchange for sweeping confidentiality and non-disparagement clauses that silence former employees will now be considered a violation of federal labor law. NLRB determined on 2/22/23 that the practice specifically violates sections 7 and 8 of the NLRB Act. The 3-1 decision comes after a Michigan employer laid off 11 employees when businesses closed early in the COVID-19 pandemic. The company required such agreements to be signed as a condition of being offered a severance package. This ruling overturns two previous decisions made within the last decade that allowed employers to continue utilizing these tactics. NLRB said in their decision that an agreement of this type is “unlawful if it precludes an employee from assisting coworkers with issues concerning their employer, and from communicating with others, including a union, and the Board, about his employment.” All US employers are subject to NLRB policies, with the exception of the railroad and airline industries. The window for an appeal is still open, but
