Need to Rethink Your Severance Agreements?

This decision, which the Board’s General Counsel had predicted, reversed a Trump-era decision allowing employers to include provisions which prevented disclosure of the Agreement’s terms and contained non-disparagement language in voluntary Severance Agreements. Under such provisions an employee agrees, in exchange for severance benefits, not to disparage or speak ill of their employer.

McLaren Macomb indicates that such broad prohibitions restricting employees’ rights to disclose the terms of the agreement and not to disparage the employer may violate the Act.

This decision should cause employers to rethink the use of such provisions in their Severance Agreements. It should be remembered, however, that not all employees are protected by the Act. Employees such as supervisors, managers, executives, and certain exempt administrative personnel do not have a right to engage in concerted protected activity. Therefore, this decision does not affect Severance Agreements which pertain to those types of employees.

While the decision specifically addresses such provisions in a Severance Agreement, employers have a couple of options to bring their agreements in line with the decision. First, the employer can remove provisions in Severance Agreements which restrict an employee’s right to talk about the agreement or the terms of the agreement as well as those provisions which restrict an employee’s ability to “disparage” the employer. Second, the employer may decide to include in the agreement a disclaimer that indicates that it is not attempting to restrict the employees’ exercise of their Section 7 rights by such provisions. Finally, the employer may decide to narrowly draft confidentiality and non-disparagement provisions to avoid the possibility of having a chilling effect on the employees’ exercise of their Section 7 rights. A danger in continuing to use these agreements is the threat they pose to other provisions such as non-solicitation of employees and/or customers.

Please contact our Labor and Employment attorneys for any specific advice on reviewing and revising Severance and/or Separation Agreements and have them reviewed to determine how best to comply with this new decision.