{"id":10206,"date":"2026-04-08T00:34:43","date_gmt":"2026-04-08T00:34:43","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/nlrb-acts-to-limit-scope-of-permissible-confidentiality-and-non-disparagement-restrictions-in-severance-agreements\/"},"modified":"2026-04-08T00:34:43","modified_gmt":"2026-04-08T00:34:43","slug":"nlrb-acts-to-limit-scope-of-permissible-confidentiality-and-non-disparagement-restrictions-in-severance-agreements","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/nlrb-acts-to-limit-scope-of-permissible-confidentiality-and-non-disparagement-restrictions-in-severance-agreements\/","title":{"rendered":"NLRB Acts to Limit Scope of Permissible Confidentiality and Non-Disparagement Restrictions in Severance Agreements"},"content":{"rendered":"\n
\n

Updated March 28, 2023<\/h3>\n

On March 22, 2023, National Labor Relations Board (\u201cNLRB\u201d or the \u201cBoard\u201d) General Counsel Jennifer Abruzzo issued a memorandum<\/a> to the NLRB\u2019s regional directors and officers on how to interpret the recent McLaren Macomb<\/em> Board decision regarding confidentiality and non-disparagement clauses in employee separation agreements (the \u201cInterpretation Memorandum\u201d). This blog post has been updated to include discussion of that memorandum.<\/p>\n

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On February 21, 2023, the NLRB overturned two of its recent decisions to hold that employers may violate the National Labor Relations Act (\u201cNLRA\u201d) if they condition a severance agreement on an employee\u2019s acceptance of confidentiality or non-disparagement restrictions that interfere with the employees\u2019 rights under the NLRA, regardless of the surrounding circumstances in which the agreement was presented to the employee. The decision returns the analysis of severance agreements under the NLRA to a pre-2020 test that focuses on the language of the restrictions within a severance agreement itself.<\/p>\n

The McLaren Macomb<\/em> Decision<\/h3>\n

In McLaren Macomb and Local 40 RN Staff Council Office, and Professional Employees, International Union (OPEIU), AFL-CIO <\/em>(\u201cMcLaren Macomb<\/em>\u201d), the NLRB held in a 4-1 decision<\/a> that a severance agreement proffered to 11 permanently furloughed employees containing non-disparagement and confidentiality provisions violated Section\u00a08(a)\u2060\u2060(1) of the NLRA.[1] In so doing, the Board expressly overruled its 2020 decisions in both Baylor University Medical Center<\/em>[2] (\u201cBaylor<\/em>\u201d) and IGT d\/b\/a International Game Technology<\/em> (\u201cIGT<\/em>\u201d),[3] which were Trump-era decisions reversing the then-longstanding framework for analyzing such restraints.[4] The McLaren Macomb<\/em> decision therefore returns the NLRB to the approach it followed prior to Baylor<\/em> and IGT<\/em>, which focuses on whether the provisions of a severance agreement unlawfully restrict an employee\u2019s rights under the NLRA.<\/p>\n

Section\u00a07 of the NLRA affords employees \u201cthe right to\u00a0\u2026 engage in\u00a0\u2026 concerted activities for the purpose of collective bargaining or other mutual aid or protection.\u201d[5] Section\u00a08(a)\u2060\u2060(1) of the Act makes it an \u201cunfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed\u201d by Section\u00a07.[6]<\/p>\n

Prior to Baylor<\/em> and IGT<\/em>, the Board looked to the \u201clanguage of the severance agreement to determine whether proffering the agreement had a reasonable tendency<\/em> to interfere with, restrain, or coerce employees\u2019 exercise of their Section\u00a07 rights.\u201d[7] In the Board\u2019s words, \u201cWhat mattered was whether the agreement, on its face, restricted the exercise of statutory rights.\u201d<\/p>\n

That changed in 2020, when the Board issued its decisions in Baylor<\/em> and IGT<\/em>. In Baylor<\/em>, the Board shifted its focus to consider the circumstances under which a severance agreement was presented to employees, rather than an independent examination of the text of the agreement. In that case, the Board held that a proffer of a severance agreement containing confidentiality, non-assistance, and non-disparagement provisions would not interfere with NLRA rights to the extent that signing the agreement is not mandatory, the restrictions applied to post-employment activities, and the employee was lawfully separated from employment and otherwise did not allege an unfair labor practice. The effect of this decision, according to the McLaren Macomb<\/em> Board, was that \u201cabsent\u201d a wrongful discharge or other unfair, discriminatory labor practice or coercive circumstances, \u201can employer is entirely free to proffer any provision, even a facially unlawful one.\u201d The Board took a similar approach in IGT<\/em> several months after issuing its decision in Baylor<\/em>.<\/p>\n

In McLaren Macomb<\/em>, a Michigan hospital permanently furloughed 11 service employees deemed to be nonessential under certain COVID-19-related government regulations. It presented those employees with a \u201cSeverance Agreement, Waiver and Release,\u201d which, among other things, included confidentiality and non-disclosure provisions with no carve-out for engaging in protected activity. The \u201cConfidentiality\u201d provision provided that the employee \u201cacknowledges that the terms of the [severance agreement] are confidential and agrees not to disclose them to any third person,\u201d except to a spouse or as necessary to legal or tax advisors or pursuant to a legal or administrative order. The \u201cNon-Disclosure\u201d provision provided that the employee \u201cpromises and agrees not to disclose information, knowledge or materials of a confidential, privileged, or proprietary nature\u201d known to the employee due to employment. It also provided non-disparagement terms requiring that the employee \u201cagrees not to make statements to [Respondent\u2019s] employees or to the general public which could disparage or harm the image of [Respondent], its parent and affiliated entities and their officers, directors, employees, agents and representatives.\u201d Finally, the severance agreement provided the employer with the right to pursue, in the Board\u2019s words, \u201csubstantial monetary and injunctive sanctions\u201d should an employee violate the severance agreement.<\/p>\n

In an administrative proceeding decided on August 31, 2021, an Administrative Law Judge, in accordance with Baylor<\/em> and IGT<\/em>, held that the proffering of, and the severance agreement itself, did not violate Section\u00a08(a)\u2060(1) of the NLRA.<\/p>\n

On appeal, the Board expressly overruled Baylor<\/em> and IGT<\/em>, \u201creturn[ing] to the prior, well-established principle that a severance agreement is unlawful if its terms have a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section\u00a07 rights, and that employers\u2019 proffer of such agreements to employees is unlawful.\u201d According to the Board, Baylor<\/em> was decided wrongly and without justification, \u201cabandoned examination and analysis of the severance agreement issue,\u201d and instead \u201cshifted focus\u00a0\u2026 to the circumstances under which the agreement was presented to employees,\u201d which created, according to the Board, a two-factor analysis for assessing whether a severance agreement violates Section\u00a08(a)\u2060(1). The Board found that the reasoning in Baylor<\/em> was flawed because, among other things, the \u201cpotential chilling effect of an unlawful severance agreement on the exercise of Section\u00a07 rights\u201d may exist even if there are no other unfair, discriminatory or coercive circumstances. Thus, the Baylor<\/em> standard \u201cdoes nothing to protect employees confronted with patently coercive severance agreements, if their employer has not otherwise violated the [NLRA].\u201d The Board further reasoned that an employer\u2019s motive is irrelevant to Section\u00a08(a)\u2060(1)\u2019s \u201ctest of interference, restraint, and coercion,\u201d and accordingly was improperly considered by the Baylor<\/em> Board. Similarly, the Board found that whether the proscriptions concerned post-employment activities was of no moment and former employees were protected by the NLRA.<\/p>\n

Specifically, the Board found that the non-disparagement provision served as a \u201ccomprehensive ban\u201d overbroad in the types of statements proscribed, the entities and individuals to which it applied, and its indefinite time frame\u2014all resulting in a chilling effect on Section\u00a07 activity. With respect to the confidentiality provision, the Board likewise found that prohibition on disclosing the terms or existence of the agreement \u201cto any third person\u201d \u201cwould reasonably tend to coerce\u201d an employee from filing a charge or assisting the Board with an investigation, thus resulting in an impermissible chilling effect on Section\u00a07 activity of all<\/em> employees because it bars an employee \u201cfrom providing information to the Board concerning the Respondent\u2019s unlawful interference with other employees\u2019 statutory rights.\u201d In addition, it found that the proffer of the agreement violated Section\u00a08(a)\u2060(1) because it conditioned the receipt of severance benefits on the employee\u2019s acceptance of the agreement\u2019s terms and resulting forfeiture of statutory rights\u2014it mattered not whether the employee accepted the agreement. The Interpretation Memorandum subsequently confirmed that \u201clawful severance agreements may continue to be proffered, maintained, and enforced if they do not have overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees.\u201d Further, to the extent the Board were to determine such a provision was unlawful, the NLRB would generally \u201cseek to have those voided out as opposed to the entire agreement, regardless of whether there is a severability clause or not.\u201d<\/p>\n

The McLaren Macomb <\/i>decision, which, like the NLRA, is applicable to employers outside of the union context, provides an opportunity for employers to review their severance agreement templates for compliance with the NRLB\u2019s current view of Sections\u00a07 and 8(a)\u2060(1). It is notable that both unionized and non-unionized employees are protected by Sections\u00a07 and 8(a)\u2060(1) of the NLRA. As a result, employers should consider whether the language of their severance agreements impermissibly restricts employees from discussing the terms and conditions of their employment, filing unfair labor charges with the Board, assisting other employees in doing so, participating in the Board\u2019s investigative process, or otherwise engaging in protected activity.<\/p>\n

Employers seeking to include confidentiality and non-disparagement clauses in severance agreements should consider, among other things, including explicit carve-outs for communications and activities protected by the NLRA. For example, an employer might include language at the end of each such clause stating that nothing in the preceding sentence(s) or in the agreement generally is intended to restrict the employee from exercising his or her rights under Section\u00a07 of the NRLA. Additionally, an employer may consider including a standalone provision stating that the employee agrees and acknowledges that nothing in the agreement restricts the employee\u2019s exercise of rights protected by Sections\u00a07 and 8(a)\u2060(1) of the NLRA. The Interpretation Memorandum confirms that such provisions \u201cmay be useful to resolve ambiguity over vague terms,\u201d but may not cure \u201cany mixed or inconsistent messages provided to employees that could impede the exercise of Section\u00a07 rights.\u201d The Interpretation Memorandum provides additional guidance not discussed herein, and employers may want to seek advice about the applicability of that guidance to their employment-related agreements.<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Updated March 28, 2023 On March 22, 2023, National Labor Relations Board (\u201cNLRB\u201d or the \u201cBoard\u201d) General Counsel Jennifer Abruzzo issued a memorandum to the NLRB\u2019s regional directors […]<\/p>\n","protected":false},"author":1,"featured_media":10207,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[7681,718,7246,1060,369,7683,7682,1781,3607,7684],"class_list":["post-10206","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lawyers","tag-acts","tag-agreements","tag-confidentiality","tag-limit","tag-nlrb","tag-nondisparagement","tag-permissible","tag-restrictions","tag-scope","tag-severance"],"_links":{"self":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/10206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=10206"}],"version-history":[{"count":0,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/10206\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media\/10207"}],"wp:attachment":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=10206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=10206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=10206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}