The National Labor Relations Board doubled down on its stance that employers violate the law when they offer severance packages that require employees to waive certain National Labor Relations Act rights — and has made clear that its position applies retroactively. NLRB General Counsel Jennifer Abruzzo issued memos to all field offices on March 22, offering further guidance following the NLRB’s McLaren Macomb decision.
The NLRB issued its decision (372 NLRB No. 58) on Feb. 21, holding that severance agreements cannot offer benefits on the condition that workers forfeit a statutory right. In that case, severance benefits hinged on agreeing to a nondisclosure provision that prohibited talent from “making statements that could disparage or harm the image of the employer, its parent and affiliates, and their officers, directors, employees, agents and representatives,” per the board’s memo.
In addition, the severance agreement’s confidentiality clause prohibited workers from “disclosing the terms of the agreement to anyone, except for a spouse or professional advisor, unless compelled by law to do so.” Breach of these provisions would also result in monetary and injunctive sanctions.
McLaren Macomb reversed NLRB’s 2020 decisions in the Baylor University Medical Center and IGT d/b/a International Game Technology cases, which stated that similar severance offers were legally acceptable unless accompanied by a “showing of animus” and additional coercive or unlawful conduct. Throughout its communications regarding McLaren Macomb, the board continued to state that this is a return to a longstanding precedent.
To be clear, the NLRB affirmed that “simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act” violates the NLRA. The employer’s offer itself is a move to bar workers from exercising their rights, NLRB asserted.
A key compliance note: As Abruzzo stated in her March 22 field office memo, whether or not employees signed the agreement isn’t the point. “The proffer itself inherently coerces employees,” she wrote, adding that the offer interferes with talent’s right to engage in future protected concerted activities and file or assist in NLRB investigations and prosecutions. “That the employee did not sign the agreement does not render the employer’s conduct lawful,” Abruzzo said.
For HR managers feeling the pressure from up top, Abruzzo made an note regarding the McLaren Macomb guidance: Supervisors are generally not protected by the NLRA, she said, but with the precedent set by the Parker-Robb Chevrolet decision, “the act does protect a supervisor who is retaliated against, such as being fired, because they are refusing to act on their employer’s behalf in committing an unfair labor practice against employees.” She believes that forcing a manager to choose between top-down orders and NLRB guidance “could also be unlawful.”
With respect to NLRB’s stance that its position applies retroactively, the agency requested that employers reach out to current or former employees with such agreements to inform them the agreements are “null and void.” Attorneys from management-side law firm Ogletree Deakins suggested in a blog post that “Employers may want to review their severance agreements and the breadth of terms with them in light of the GC’s guidance.” Eric Meyer, partner at FisherBroyles, also suggested in a blog post that the guidance may be challenged in court.
