Employers have historically used non-disparagement and confidentiality provisions when resolving threatened or actual claims employees may pursue. The logic of proposing such clauses flows from the reasonable desire to bring as much closure to disputes as is possible. However, recent legal decisions have questioned whether and when such provisions may be permissible.
In McLaren Macomb, 372 NLRB No. 58 (2023), the National Labor Relations Board (NLRB) held such provisions in severance agreements have a tendency to interfere with employees' rights under Section 7 of the National Labor Relations Act (NLRA). Section 7 rights include employees' rights to engage in concerted activities. Notably, NLRA Section 7 rights cover non-supervisory employees whether or not they are represented by a union.
The NLRB's General Counsel subsequently opined that confidentiality provisions are unlawful unless they are "narrowly-tailored to restrict the dissemination of proprietary or trade secret information for a period of time based on legitimate business justifications." The General Counsel further suggested that non-disparagement clauses are prohibited unless "narrowly-tailored, justified," and "limited to employee statements about the employer that meet the definition of defamation as being maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity." (See https://www.nlrb.gov/news-outreach/news-story/nlrb-general-counsel-issues-memo-with-guidance-to-regions-on-severance.) Notably, the General Counsel's opinion would broadly cover such clauses in other employment agreements, communications, and policies. While the General Counsel's views do not have the force of law, they signal other challenges employers may face.
Given these developments, employers should review their employment and severance agreements and related policies with their counsel to evaluate any litigation risk.
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