HR Alert: NLRB Rules on Non-Disparagement Provisions

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Last month, we reported on the Federal Trade Commission’s proposal to ban non-compete clauses in employment agreements. On February 21, 2023, the National Labor Relations Board (NLRB) ruled that companies can’t require employees to waive their rights to speak about the company when signing a severance agreement. Although unrelated to the FTC’s proposed rules, this decision is another indication that federal law seemingly is shifting towards favoring an employee’s rights over their employer’s reputation.

The NLRB’s decision restores the longstanding, well-established precedent that employers can’t insist on a severance agreement that requires employees to broadly waive statutory rights. The rights in this case were the right to speak about the company. 

In 2020, the NLRB abandoned precedent by finding two severance agreements lawful that contained non-disparagement provisions. This week’s decision reverses those 2020 rulings. This important issue deals with severance agreements that prohibit furloughed employees from making disparaging statements about the employer and from disclosing the terms of their severance agreement. For clarity, a non-disparagement provision is one that prohibits the employee from saying anything negative about her former employer.

This week’s NLRB decision involved two separate employers in two different matters. As a result, it seems that the NLRB’s ruling will be applied on a widespread basis, affecting myriad industries and professions. The NLRB contended that when drafting severance agreements, employers already realize that they’re in a position to call the shots and coerce their employees into waiving important legal rights. But these are statutory rights provided by the National Labor Relations Act, and – says the NLRB – employers simply can’t require their employees to broadly waive these rights. The NLRB’s chair, Lauren McFerran, explained that employers can’t force a choice between receiving severance benefits and exercising rights provided by the Act.

As a consequence, this new NLRB ruling makes it unlawful for a severance agreement to contain terms that “interfere with, restrain, or coerce employees” in the exercise of their rights. As a result, then, employers across the country seemingly now are prohibited from conditioning the receipt of severance benefits on their employee’s waiver of statutory rights.

One example of an employee’s right under section 7 of the National Labor Relations Act – a federal law that governs workplaces nationwide – is the right to communicate with third parties about an ongoing labor dispute. The NLRB now says that by forcing employees to sign non-disparagement agreements as part of a severance package, employers may be attempting to prevent their former employees from lawfully participating in investigations into unfair labor practices – and that will not be permitted.

Lots to digest here, and the attorneys at the Coppola Firm are committed to share with you up-to-date developments on employment law. To be sure, sometimes these developments occur daily.

As well, we’re here to help with any of your routine and complex employment law needs. Feel free to reach out to us at any time at 716.839.9700 or if you have questions or concerns you need answered.

Lisa Coppola

Written by Lisa Coppola

Founder of The Coppola Firm

Lisa A. Coppola, Esq. understands the challenges her clients face, whether they’re starting a new business, taking their existing operations in a new direction, or facing a claim or threat.

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