Recent NLRB Decision May Have Big Impact on Severance Agreements

In a recent decision from the National Labor Relations Board (“NLRB”), the government has essentially put employers on notice that they can no longer “silence” terminated employees with broad confidentiality and non-disparagement clauses that historically have been standard provisions in severance or separation agreements. According to the decision in Case Number 07-CA-263041, these provisions violate employees’ rights under sections 7 and 8(a)(1) of the National Labor Relations Act.

“A severance agreement is unlawful if it precludes an employee from assisting coworkers with workplace issues concerning their employer, and from communicating with others, including a union, and the Board, about his employment,” the board wrote in its decision.

With the exception of a few exempted industries (e.g., railroads and airlines), all U.S. companies fall under the jurisdiction of the NLRB.

While this ruling may be appealed, the decision is effective immediately. That means business owners and HR executives should carefully review—and revise as appropriate—their template severance agreements to ensure they do not include overly broad language that would restrict workers’ rights in this regard.