Severance packages now untethered from non-disparagement and non-disclosure requirements.

 On February 21, 2023, the National Labor Relations Board declared it unlawful for employers to condition employee severance packages on return promises of secrecy and non-disparagement. The case is called  McLaren Macomb and Local 40 RN Staff Council,Office and Professional Employees, International Union (OPEIU), AFL–CIO. Case 07–CA–263041, and it concerned the following language that many of us have learned to take for granted in severance packages:

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. 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.

The agreement provided for substantial monetary and injunctive

sanctions against the employee in the event the

nondisparagement and confidentiality proscriptions were

breached:

 

8. Injunctive Relief. In the event that Employee

violates the provisions of paragraphs 6 or 7, the Employer

is hereby authorized and shall have the right

to seek and obtain injunctive relief in any court of

competent jurisdiction. If Employee individually or

by his/her attorneys or representative(s) shall violate

the provisions of paragraph 6 or 7, Employee shall

pay Employer actual damages, and any costs and attorney

fees that are occasioned by the violation of

these paragraphs.

The case involved union hospital workers. After a long and robust analysis of past decisions, spanning decades, the Board concluded:

Examining the language of the severance agreement here, we conclude that the nondisparagement and confidentiality provisions interfere with, restrain, or coerce employees’ exercise of Section 7 [of the National Labor Relations Act] rights.

There may be limits to those employment relationships to which this ruling applies. If you find yourself in the situation where you are offered severance, and it is conditioned on this or similar language, get some advice.