Employers: Continue to be cautious when including confidentiality and non-disparagement clauses in separation agreements.
As previously reported on PERKS, last year, the National Labor Relations Board held in McLaren Macomb, 372 NLRB No. 58 (2023) that a separation agreement that included non-disparagement and confidentiality clauses violated the National Labor Relations Act because it restricted the rights of employees to engage in protected concerted activity. The Board also held that the employer violated the NLRA by unlawfully furloughing employees without bargaining with the union and by directly dealing with those employees in offering them separation agreements.
In a recent decision, the Sixth Circuit Court of Appeals enforced the McLaren decision, but effectively sidestepped addressing whether inclusion of non-disparagement and confidentiality clauses in employee agreements violates the NLRA. The court first affirmed the Board’s conclusions that the employer failed to bargain with the union about the furlough decision and dealing directly with the impacted employees instead of the union. But while the court held that the separation agreements issued were unlawful, it reached this conclusion under previous Board precedent, and not due to the specific reasoning addressed by the Board in McLaren.
In light of this decision, the Board’s McLaren decision on confidentiality and non-disparagement clauses still stands, for now. Employers should continue to be mindful when including these clauses in separation agreements and other employment agreements. Make sure to consult with counsel in preparing these agreements.