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Employee Severance Agreements; Silence Is No Longer Golden or Allowed

By: Brian M. Zets, Esq.

Last week, the National Labor Relations Board (NLRB) turned back the clock to pre-2020 when it determined a Mt. Clemens hospital operator violated Section 8(a)(1) of the National Labor Relations Act when it included a broadly drafted confidentiality section and non-disclosure section in a severance agreement.

Like a lot of individuals whose employment is ending, 11 temporarily furloughed bargaining unit employees at the hospital were presented with a Severance Agreement, Waiver, and Release. Like most employee severance agreements, these agreements contained the following familiar language:

  • 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.

  • 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.

So, what’s wrong with this often used, boilerplate language? According to the NLRB, the “confidentiality provision has an impermissible chilling tendency . . . because it bars the subject employee from providing information to the Board concerning the Respondent’s unlawful interference with other employees’ statutory rights.” Same thing for the non- disclosure language. For the NLRB, it too has chilling tendencies. According to the NLRB, the non-disparaging provision’s “far-reaching proscription—which is not even limited to matters regarding past employment with the Respondent—provides no definition of disparagement”, “applies to statements not only toward the Respondent but also to “’its parents and affiliated entities and their officers, directors, employees, agents and representatives’”, and has “no temporal limitation”.

Unless this decision is appealed and reversed, it is the new normal. With it comes a host of new questions, such as will this decision have an unintended consequence – a chilling effect on employers’ willingness to offer up generous severance packages. Will this decision serve as a springboard and be expanded to cover settlement and other agreements? Could adequate severability or release language protect the enforceability of the remainder of an employment severance agreement? Could carefully drafted and narrowly tailored confidentiality and non-disclosure language pass muster under Section 8(a)(1)? Only time will tell. To read the decision see McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, International Union (OPEIU), AFL–CIO. Case 07–CA– 263041


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