U.S. labor board limits gag clauses in severance agreements

The seal of the National Labor Relations Board (NLRB) is seen at their headquarters in Washington, D.C.
The seal of the National Labor Relations Board (NLRB) is seen at their headquarters in Washington, D.C., U.S., May 14, 2021. REUTERS/Andrew Kelly
  • Laid-off workers can't sign away labor rights, board says
  • Decision overrules Trump-era precedent

Feb 22 - The National Labor Relations Board has ruled that laid-off workers cannot be required to sign agreements that contain confidentiality clauses and other provisions that could deter them from exercising their rights under federal labor law in exchange for receiving severance.

The board in a 3-1 decision on Tuesday overturned a pair of Trump-era rulings that said severance agreements only violate federal labor law when employers engage in other unlawful conduct when asking workers to sign them.

The NLRB's Democratic majority said those rulings were misguided and "granted employers carte blanche to offer employees severance agreements that include unlawful provisions."

The case involves a Michigan hospital operator, McLaren Macomb, that furloughed 11 employees when the surgery center where they worked was closed during the COVID-19 pandemic.

The board said it was illegal for the company to offer the workers severance agreements that included confidentiality and non-disparagement provisions because they could be discouraged from filing complaints with the NLRB or publicizing labor disputes.

Lawyers for the company did not immediately respond to a request for comment. Nor did a lawyer for the Office and Professional Employees International Union, which represented the furloughed workers.

The NLRB in recent months has chipped away at key Trump-era precedent that was seen as favoring businesses over unions and workers. That includes a decision allowing employees to picket on property where they work but that is not owned by their employer and a proposal to roll back changes that Republican board members had made to the union election process.

NLRB member Marvin Kaplan, an appointee of former President Donald Trump, dissented on Tuesday. He said there was no evidence that the decisions tossed out by the majority had led the board to uphold illegal severance agreements.

"And pure speculation does not provide a reasonable justification for overruling Board precedent," Kaplan wrote.

The case is McLaren Macomb, National Labor Relations Board, No. 07–CA–263041.

For McLaren Macomb: Brian Shekell of Clark Hill

For the union: Scott Brooks of Gregory, Moore, Brooks & Clark

For the NLRB general counsel: Tony Smith

Read more:

Contract employees' right to organize restored by U.S. labor board

U.S. labor board moves to nix Trump-era union election rule

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.