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No More Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights

Employment Attorneys

Posted in on March 24, 2023

On February 21, 2023, the National Labor Relations Board (NLRB) ruled that employers may not require confidentiality or non-disparagement as a condition of severance agreements because those clauses would improperly waive rights under the National Labor Relations Act. The decision issued in the McLaren Macomb and Local 40 RN Staff Council case, where it was alleged that McLaren Macomb had violated the National Labor Relations Act §8(a)(1) and §8(a)(5). NLRB employee rights include “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.” It also requires employers to bargain in good faith with the union representative chosen by the employees.

Severance agreement National Labor Relations Board employee rights NLRB

McLaren was offering severance but requiring employees sign furlough agreements that included confidentiality and non-disclosure provisions. The agreements were proposed without Union participation. Having employees sign these without first notifying or having the Union be involved violated §8(a)(1) and §8(a)(5). The confidentiality provisions states, “The Employee acknowledges that the … Agreement … [is] confidential and agrees not to disclose … [it] 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” and the non-disclosure provision states, “[T]he Employee … 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 …”

The board decided that employers may not offer employees severance agreements that require employees to broadly waive their rights under the National Labor Relations Act. The board recognized that a severance agreement can make the employee feel as though they are not able to speak ill against the employer to receive the benefit from the agreement, however, this decision will prohibit employers having employees sign agreements related to severance of employment that force them to give up their labor rights.

Drafting enforceable employment-related agreements requires knowledge of state and federal laws and regulations. If you need help with this or other employment matters, please contact any member of the employment law team at Baker, Braverman & Barbadoro, PC.

By: Isabella Shields, Law Clerk


McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, International Union (OPEIU), AFL–CIO. Case 07–CA– 263041

Board Rules that Employers May Not Offer Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights | National Labor Relations Board (nlrb.gov)

National Labor Relations Act to sections 8(a)(1) and 8(a)(5) 29 C.F.R. § 406.6