NLRB Says No to Non-Disparagement, with a twist.

A lot of updates went out yesterday when the National Labor Relations Board issued its new decision in McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, International Union (OPEIU), AFL–CIO. Case 07–CA– 263041 that non-disparagement clauses were no longer lawful in severance agreements. And in broad strokes, that is correct. Many typical non-disparagement clauses are no longer lawful to include in severance agreements offered to employees. But if that is all you got in your case alert, you might have missed some nuance in the decision.

The majority of the Board overturned recent holdings from the past few years that had allowed employers to include non-disparagement clauses in severance agreements, without violating labor law. The Board found that these recent opinions departed from well-established precedent and understandings of public policy that needed to be corrected. So it reaffirmed that the objective breadth of a non-disparagement clause determined whether it "substantially interferes with employees’ Section 7 rights."

On that basis, it held that the broadly worded non-disparagement clause at issue in the case before it was unlawful, regardless of the intentions of the employer in proffering the severance agreement that included the clause. But the key word here is "broadly." Indeed, on its Twitter post about the decision the NLRB highlighted this point:

Today, the Board issued a decision in McLaren Macomb, returning to longstanding precedent holding that employers may not offer employees severance agreements that require employees to broadly waive their rights under the National Labor Relations Act. (emphasis added)

The decision, itself, pointed out that there is disparaging activity that has not been protected since 1953, when the Board allowed employees to be fired for disparaging comments, which was upheld by the Supreme Court in National Labor Relations Board v. Local Union No. 1229 International Brotherhood of Electrical Workers.

But the clause at issue in McLaren Macomb "provides no definition of disparagement that cabins that term to its well-established NLRA definition." Thus, it was not clear that the non-disparagement clause only covered employee communications "so 'disloyal, reckless or maliciously untrue as to lose the Act's protection.'” And that is why the non-disparagement clause was unlawful.

So what is the upshot? Well, it means that your severance agreements with non-disparagement provisions do not necessarily have to go in the trash. But they must be subject to careful revision to match the guidance in McLaren Macomb and NLRB v. Local Union No. 1229 to "cabin that term to its well established NLRA definition."