On Tuesday, February 21, 2023, the three-member Democratic majority of the National ‎Labor Relations Board (“NLRB”) issued a decision in McLauren Macomb, reverting back to pre-‎Trump era standards and ruling that non-disparagement and confidentiality provisions in a ‎separation agreement violated the concerted right activity provisions of Section 7 of the National ‎Labor Relations Act (“NLRA”). ‎

Section 7 of the NLRA applies to most U.S. employers – including those with non-‎unionized workforces – and protects the rights of employees to engage in “concerted activity,” ‎which includes when two or more employees take action for their mutual aid or protection ‎regarding the terms or conditions of employment, or where one employee brings issues to ‎management on behalf of a group of employees. Concerted right activities cover those water ‎cooler types of conversations that employees may have about their wages or other terms or ‎conditions of their employment. Most supervisors and managers are not covered by Section 7. ‎The provision also does not cover independent contractors, public sector employees, and some ‎agricultural workers.‎

In McLauren Macomb, the NLRB reviewed confidentiality and non-disparagement ‎provisions in separation agreements between a unionized employer and several employees, and ‎found the provisions were overbroad because they prohibited employees from disclosing ‎information about their employment or the terms of their severances and making negative ‎statements about their employer “to any third person,” including co-workers or a union. The ‎NLRB ruled that such prohibitions effectively “chilled” employees’ Section 7 concerted activity ‎rights to participate in discussions about or to improve the terms and conditions of their ‎employment that are permitted under Section 7. In the decision, the NLRB also reminded that ‎Section 7 rights extend to former employees, and to concerted efforts through a variety of ‎channels including administrative, judicial, legislative, political, newspapers, the media, social ‎media, etc.‎

The NLRB further ruled in McLauren Macomb that the mere inclusion of the provisions ‎in the Agreements violated the NLRA. The employer could not – as it could have under Trump-‎era NLRB rulings – defend against the unfair labor practice charge that they would not enforce ‎the provisions. Notably, while the decision focused on confidentiality and non-disparagement ‎provisions in separation agreements, it may foreshadow a broader swing by the NLRB back to ‎pre-Trump era Section 7 standards in other contexts.

Although it is clear that employers should again take extra care in drafting employee ‎agreements and policies to ensure they do not restrain Section 7 rights, it is less clear how exactly ‎to do that. A conservative approach may be to avoid inclusion of confidentiality and non-‎disparagement provisions altogether. However, other compliant options may be available.‎

Over the past few years, several states – including Oregon, Washington, California, and ‎others – have enacted laws restricting employers from including provisions in agreements with ‎employees that include non-disparagement and confidentiality provisions that would prevent ‎employees from discussing certain harassment or discrimination or other unlawful conduct in the ‎workplace. Employers in these states have found alternative ways to comply with those laws by ‎including disclaimers in confidentiality or non-disparagement provisions stating that they do not ‎prevent employees from engaging in such legally protected disclosures. ‎

Similarly—and although untested before the current NLRB—non-interference carve-outs ‎that clearly permit employees to engage in Section 7 concerted activities, file unfair labor practice ‎charges, assist others in doing so, and cooperate with investigations and proceedings, may be a ‎viable option to avoid a Section 7 violation without fully abandoning use of confidentiality and ‎non-disparagement provisions. There may also be other options available to strike the balance ‎between protecting employers’ legitimate business interests in protecting their reputation and ‎confidential business data on the one hand, and protecting employees’ Section 7 rights on the ‎other. ‎

In light of the growing trend to restrict confidentiality and non-disparagement provisions ‎in employee agreements and policies, employers should be careful in drafting employment and ‎separation agreements moving forward and carefully consider whether and to what extent a non-‎disparagement or confidentiality provision is actually necessary. Employers will likely want to ‎have legal counsel draft or review their agreements and policies to help ensure compliance with ‎all applicable laws and provide the best defense possible to an unfair labor practice complaint or ‎other legal action. ‎

For those Agreements that are already in place with broad confidentiality or non-‎disparagement provisions, it is possible that an employee could bring a charge, but the issue for ‎the NLRB will be whether the provisions were illegal when drafted—that is, under the then ‎applicable NLRB rulings. ‎

This article summarizes aspects of the law and does not constitute legal advice. For legal ‎advice on your situation, you should contact an attorney.‎

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