Are severance agreements dead? The value of those agreements for employers will be significantly less if employees are free to disparage employers after being paid.

Update to Employee Severance Agreements by The National Labor Relations Board (NLRB)

In recent years, the landscape of employee severance agreements has undergone significant scrutiny and adjustment, particularly with regards to confidentiality and non-disparagement provisions. The National Labor Relations Board (NLRB) has played a pivotal role in shaping these changes, emphasizing the protection of employee rights under the National Labor Relations Act (NLRA).

The recent ruling by the NLRB highlights a critical aspect of severance agreements – the balance between safeguarding proprietary information and respecting employee rights. The board’s stance is clear: certain clauses that restrict exiting employees from discussing their former employer’s conduct with other employees or government agencies can be deemed unlawful. Such provisions not only impede the free flow of information but also hinder employees from raising legitimate concerns or complaints.

One of the key principles emphasized by the NLRB is the right of employees to critique employer policies and practices without fear of reprisal. While confidentiality clauses are necessary to protect sensitive company information, they must not infringe upon the fundamental rights of employees to engage in protected concerted activities. According to legal experts, employees retain the freedom to discuss labor disputes as long as they refrain from being disloyal, reckless, or maliciously untrue.

For employers, this ruling underscores the importance of crafting carefully tailored severance agreements that strike a balance between protecting their interests and upholding employee rights. While it remains imperative to safeguard proprietary information, employers must ensure that their agreements comply with applicable labor laws and regulations. Failure to do so can result in legal challenges and reputational damage.

Furthermore, this ruling reflects a broader trend towards greater transparency and fairness in the workplace. State-based pay transparency legislation and federal employment laws pertaining to non-compete clauses are indicative of the concerted efforts by government bodies to safeguard the interests of workers nationwide. Employers must adapt to these evolving regulatory frameworks and ensure that their policies and practices align with the spirit of these legislations.

In conclusion, the NLRB’s ruling on confidentiality and non-disparagement provisions in severance agreements serves as a reminder of the importance of upholding employee rights while safeguarding legitimate business interests. Employers must tread carefully when drafting such agreements, striking a delicate balance between protecting proprietary information and respecting the rights of their employees. By staying informed and compliant with relevant laws and regulations, employers can foster a workplace culture that values transparency, fairness, and mutual respect.

Need help navigating your employment agreements? We’re here to help employers and business owners with staying compliant. Contact us now to learn how to stay compliant.

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Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is a substitute for, qualified legal advice. Your review or receipt of this article by Lexern Law Offices, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.