NLRB General Counsel issues Memo attempting to clarify Board decision regarding confidentiality clauses in severance agreements
The NLRB General Counsel issued Memorandum GC 23-05 attempting to clarify the Board’s recent decision in McLaren Macomb regarding confidentiality clauses in severance agreements.
The NLRB General Counsel’s Memo can be summarized as making the following broad points:
- Severance agreements are not prohibited in general.
- Severance agreements with confidentiality clauses that are narrowly tailored to protect “proprietary or trade secrets information” are enforceable.
- The NLRB General Counsel’s office will pursue charges against employers who merely offer a severance agreement with confidentiality language that her office believes violates section 7 of the NLRA, whether or not the individual signed it.
- The NLRB General Counsel’s office will pursue charges against employers involving severance agreements predating McLaren Macomb, in other words, her office will view the Board’s decision as retroactive.
- Although the Memo did not address the statute of limitations, it is noted that NLRA violations generally carry a 6-month statute of limitations.
- Because Section 7 of the NLRA protects both unionized and non-unionized employees, the NLRB General Counsel’s office will pursue charges against employers it believes have violated McLaren Macomb even where no union or actual union-organizing activity is involved.
- When the NLRB General Counsel’s office chooses to prosecute an employer for what it believes is a McLaren Macomb violation, the Memo states her office will seek only to strike the violative language, not the release itself or other portions of the severance agreement.
Unfortunately the NLRB General Counsel’s Memo raises additional questions and fails to answer many questions raised by the Board’s ruling in McLaren Macomb, including at least and without limitation the following:
- The NLRB General Counsel’s Memo suggests her office may take a dim view of severance agreements that attempt to waive employment claims, not just claims under the NLRA. Likewise, it suggests that her office may look restrictively at releases as to claims arising after the date of the severance agreement.
- The NLRB General Counsel’s Memo failed to provide any kind of sample language for what her office will accept as permissible confidentiality language in a severance agreement.
- The NLRB General Counsel’s Memo states that a savings clause “may be helpful” but failed to explain further what kind of savings/disclaimer language would be helpful or to what extent it might help. For example, since the Memo states her office will seek only to strike language to the extent violative of section 7 of the NLRA, it seems unlikely that any enforcement action would be appropriate for her office if an employer, confronted by an individual asserting a section 7 issue or even filing an NLRB charge, were to review its severance agreement (or even proffered but unsigned severance agreement) then note the presence of savings language and agree that nothing in the draft would be used in violation of section 7, especially where the employer then agrees to amend or even revise language.
- The NLRB General Counsel’s Memo said that it would review but failed to explain when or even if other clauses besides confidentiality provisions can be violative of McLaren Macomb. Such other clauses might include non-disparagement provisions, non-compete clauses, non-solicit clauses, no-poaching clauses, even broad general release clauses and covenants not to sue. For example the NLRB General Counsel’s Memo suggested, without explaining, that her office might view at least some cooperation clauses as running afoul of section 7.
- It appears that even under this new restrictive approach confidentiality provisions that provide that the terms of the severance agreement, including the amount of severance, are permissible. It so appears because in her Memo, the NLRB General Counsel stated that NLRB OM Memo OC 07-27 remains in effect (“Yes. OM 07-27 is consistent with the McLaren Macomb decision.”), which in turn so provided (see its section 3).
- The NLRB General Counsel’s Memo failed to explain how it will view confidentiality and related clauses when requested by the individual, especially in states with so-called Me-Too laws that provide for the enforceability of such provisions when requested by the individual.
- The NLRB General Counsel’s Memo notes that supervisors are generally not protected by the NLRA but hypothesized that a supervisor might somehow become protected if they refused to extend a draft severance agreement that the supervisor believed was violative of McLaren Macomb.
The Board’s decision in McLaren Macomb is likely to be appealed and subjected to further litigaiton, as is the NLRB General Counsel’s Memo.