Nondisparagement and Confidentiality Clauses In Severance Agreements Violate NLRA

Just about every single severance agreement I've ever seen in 36 years of law practice have two standard clauses: the former employee cannot disparage the former employer, meaning they can't say anything negative about the company or its employees and frequently to a broader list of entities; and a confidentiality clause prohibiting the former employee from telling anyone about the agreement, frequently prohibiting them from even saying it exists.

Well, the National Labor Relations Board has just ruled that both provisions are illegal under the National Labor Relations Act.

Regarding nondisparagement: 

This far-reaching proscription—which is not even limited to matters regarding past employment with the Respondent— provides no definition of disparagement that cabins that term to its well-established NLRA definition under NLRB v. Electrical Workers Local 1229 (Jefferson Standard Broadcasting Co.), supra, 346 U.S. at 477. Instead, the comprehensive ban would encompass employee conduct regarding any labor issue, dispute, or term and condition of employment of the Respondent. As we explained above, however, employee critique of employer policy pursuant to the clear right under the Act to publicize labor disputes is subject only to the requirement that employees' communications not be so “disloyal, reckless or maliciously untrue as to lose the Act's protection.” Emarco, Inc., 284 NLRB 832, 833 (1987).  

Further, the ban expansively applies to statements not only toward the Respondent but also to “its parents and affiliated entities and their officers, directors, employees, agents and representatives.” The provision further has no temporal limitation but applies “[a]t all times hereafter.” The end result is a sweepingly broad bar that has a clear chilling tendency on the exercise of Section 7 rights by the subject employee. This chilling tendency extends to efforts to assist fellow employees, which would include future cooperation with the Board’s investigation and litigation of unfair labor practices with regard to any matter arising under the NLRA at any time in the future, for fear of violating the severance agreement’s general proscription against disparagement and incurring its very significant sanctions. The same chilling tendency would extend to efforts by furloughed employees to raise or assist complaints about the Respondent with their former coworkers, the Union, the Board, any other government agency, the media, or almost anyone else. In sum, it places a broad restriction on employee protected Section 7 conduct.  We accordingly find that the proffer of the nondisparagement provision violates Section 8(a)(1) of the Act.

Our scrutiny of the confidentiality provision of the severance agreement leads to the same conclusion. The provision broadly prohibits the subject employee from disclosing the terms of the agreement “to any third person.” The employee is thus precluded from disclosing even the existence of an unlawful provision contained in the agreement. This proscription would reasonably tend to coerce the employee from filing an unfair labor practice charge or assisting a Board investigation into the Respondent’s use of the severance agreement, including the nondisparagement provision. Such a broad surrender of Section 7 rights contravenes established public policy that all persons with knowledge of unfair labor practices should be free from coercion in cooperating with the Board. The confidentiality provision has an impermissible chilling tendency on the Section 7 rights of all employees because it bars the subject employee from providing information to the Board concerning the Respondent’s unlawful interference with other employees’ statutory rights. See Metro Networks, supra, 336 NLRB at 67.

Regarding confidentiality:

The provision broadly prohibits the subject employee from disclosing the terms of the agreement “to any third person.”  The employee is thus precluded from disclosing even the existence of an unlawful provision contained in the agreement. This proscription would reasonably tend to coerce the employee from filing an unfair labor practice charge or assisting a Board investigation into the Respondent’s use of the severance agreement, including the nondisparagement provision. Such a broad surrender of Section 7 rights contravenes established public policy that all persons with knowledge of unfair labor practices should be free from coercion in cooperating with the Board.  The confidentiality provision has an impermissible chilling tendency on the Section 7 rights of all employees because it bars the subject employee from providing information to the Board concerning the Respondent’s unlawful interference with other employees’ statutory rights. See Metro Networks, supra, 336 NLRB at 67.

The confidentiality provision would also prohibit the subject employee from discussing the terms of the severance agreement with his former coworkers who could find themselves in a similar predicament facing the decision whether to accept a severance agreement. In this manner, the confidentiality provision impairs the rights of the subject employee’s former coworkers to call upon him for support in comparable circumstances. Additionally encompassed by the confidentiality provision is discussion with the Union concerning the terms of the agreement, or such discussion with a union representing employees where the subject employee may gain subsequent employment, or alternatively seek to participate in organizing, or discussion with future co-workers.  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. Id. Conditioning the benefits under a severance agreement on the forfeiture of statutory rights plainly has a reasonable tendency to interfere with, restrain, or coerce the exercise of those rights unless it is narrowly tailored to respect the range of those rights. Our review of the agreement here plainly shows that not to be the case. We accordingly find that the proffer of the confidentiality provision violates Section 8(a)(1) of the Act. 

So, is this a magic wand? Did such provisions suddenly go poof? No. Management side will fight this decision like cornered rats. Still, keep an eye out for further developments. In the meantime, you might want to file with NLRB if your employer presents you with any such provisions in a proposed severance agreement.

NLRB Proposed Joint Employer Rule Would Help Workers

Last year, the National Labor Relations Board proposed a new rule that would change how it decides who is an employer. Under the proposed rule announced September 6, 2022, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules. The comment period ended in December, so we can expect the new rule to arrive any time now.

To put it simply, when two employers are connected in some way, they become joint employers and they both have responsibility for their workers. It's like when two people get married, they both have responsibilities for each other and their life together.

It's important because it means that workers have more protections and can hold both employers accountable for things like unionizing and unfair labor practices.

The new joint employer rule will have many benefits for employees. Here are some of the most significant ways that employees can benefit from this rule:

1. Greater protections against retaliation: When an employee is jointly employed by two employers, they are protected by the National Labor Relations Act (NLRA) against retaliation from either employer. This means that if an employee engages in protected concerted activity, such as organizing a union, discussing wages, or discussing working conditions, they cannot be fired or otherwise punished by either employer.

2. More bargaining power: When employees are jointly employed by two employers, they can bargain with both employers for better wages, benefits, and working conditions. This gives employees more bargaining power and ability to unionize than they would have if they were only employed by one employer. The possibility of NLRB sanctions will hopefully make smaller employers think twice about engaging in unfair labor practices.

3. More coverage: If one employer does not fall under the NLRB's jurisdiction because it has too little income or does not meet other jurisdictional standards, combining two employers will make it easier to bring the company under the umbrella of the National Labor Relations Act.

4. Better wages and working conditions: Ultimately, the ability to bargain collectively will help increase wages and improve overall working conditions for employees.

Overall, the National Labor Relations Board's joint employer rule benefits employees by providing greater protections, improved working conditions, and more bargaining power. By holding both employers accountable, employees are more likely to have a voice in the workplace and to receive fair treatment.

Needless to say, managment-side is howling about the possibility of this rule going into effect. They are crying gloom and doom and predict business armageddon. I suspect that this NLRB won't accede to their demands and that this rule or something quite similar will be the final rule that is implemented this year.   

SNL's "It's Pat" Shows How Easy It Is To Respect Nonbinary Coworkers

 With all the anti-trans stuff coming out of the GOP, and especially Florida, I started thinking about an old Saturday Night live sketch, “It’s Pat.” And when I first thought about it, I thought it might be considered offensive to nonbinary people now. But then it occurred to me that the sketch actually shows how easy it is to respect the pronouns of nonbinary workers. The sketch features a character named Pat, whose gender is not specified or obvious, and is played by Julia Sweeney.

The other characters in the sketch are confused about which pronouns (either "he" or "she") and other gender-specific terms to use to refer to Pat, so they avoid using gender-specific language. For instance, on Pat’s birthday they start to sing, “For he’s/she’s a jolly good fellow,” but after a mixture of choices they settle on, “For Pat’s a jolly good person.” Pat’s coworkers ultimately refer to Pat as “they/them” in order not to misgender Pat. They did this naturally, if a little awkwardly, before the use of neutral pronouns became both common and a political football.

The sketch is meant to be humorous, but it also demonstrates both the ease of using the correct pronouns for nonbinary workers, and how we used to have more respect for our fellow humans. Nowadays, the right would probably say the sketch is too "woke" and claim offense of the use of neutral language. Using the correct pronouns is a basic form of respect and helps to create an inclusive and welcoming workplace for all employees. This sketch shows that it is not difficult to respect the pronouns of nonbinary workers and that everyone can do it with a little effort and awareness.

Like with the coworkers in “It’s Pat,” sometimes neutral language and pronouns can be confusing at first. But with a little effort and respect, it is actually pretty easy. If you make a mistake, just correct it. Deliberately misgendering people is cruel and disrespectful.

By demonstrating the ease of using the correct pronouns, the sketch should encourage everyone to make an effort to be more inclusive and respectful in their interactions with nonbinary coworkers.

FTC Proposes Ban On Noncompete Agreements

 The Federal Trade Commission is proposing a complete ban on agreements banning former employees and independent contractors from going to work for competitors. Per the FTC:

FTC’s proposed rule would generally prohibit employers from using noncompete clauses. Specifically, the FTC’s new rule would make it illegal for an employer to:enter into or attempt to enter into a noncompete with a worker;
maintain a noncompete with a worker; or
represent to a worker, under certain circumstances, that the worker is subject to a noncompete.

The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.

The proposed rule would generally not apply to other types of employment restrictions, like non-disclosure agreements. However, other types of employment restrictions could be subject to the rule if they are so broad in scope that they function as noncompetes.

The FTC said that noncompetes are, "a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans."

Before you get too excited, remember that the rule hasn't been put in place yet, there will be lots of legal challenges, and there is no way Congress will do anything to support the agency. The Supremes have been all about limiting the power of federal agencies, so expect them to block the rule if it goes into place.  Also remember that nonsolicitation agreements will probably still be legal.

Still, once it goes into effect, there will be a brief period where noncompetes will not exist. So people will get jobs, and then they might have to give them up and face lawsuits if the courts reverse the ban. I recommend caution, but also will keep my fingers crossed that these agreements are finally eliminated for good.