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Posts from Joshua Newville, a Minnesota employment lawyer, civil rights attorney, and mediator.

Confidentiality and Non-Disparagement in Severance Agreements? Think twice.


In recent years, employers have often included clauses requiring confidentiality and non-disparagement in severance agreements. These clauses can, at times, protect both the employer and the employee. However, the National Labor Relations Board's (NLRB) February decision in the McLaren case has brought this practice under scrutiny, raising pertinent questions about workers' rights. Let's delve into the details of the decision and its implications for confidentiality and non-disparagement provisions.


A McLaren car on a street is a reminder of a recent NLRB decision regarding the use of confidentiality and non-disparagement provisions in severance agreements

Background

McLaren, widely recognized in the racing and automotive sectors, found itself embroiled in allegations of unfair labor practices. Among the numerous concerns raised, a pivotal aspect was the company's use of confidentiality and non-disparagement clauses in severance agreements.


The Decision

In its judgment, the NLRB made several significant observations regarding these clauses:

  1. Curbing Workers’ Rights: The NLRB determined that by including clauses that prohibit employees from discussing their employment experiences or criticizing the company post-employment, McLaren essentially curtailed the rights of its former employees to engage in protected activities under the National Labor Relations Act (NLRA).

  2. Chilling Effect on Labor Rights: The Board opined that such clauses could have a chilling effect on employees, discouraging them from sharing their genuine work experiences or collaborating with peers on addressing shared workplace concerns.

  3. Unlawful Provisions: Crucially, the NLRB held that the confidentiality and non-disparagement clauses used by McLaren were unlawful as they violated certain provisions of the NLRA.


Implications

The decision in the McLaren case offers broader insights into the acceptability and limitations of these clauses:

  1. Re-evaluation of Severance Agreements: Companies will now need to be cautious when drafting severance agreements, ensuring that they do not infringe upon the rights protected under the NLRA. Legal teams will likely revisit and revise the wording of such clauses to avoid potential pitfalls.

  2. Balancing Act: While companies have a legitimate interest in protecting their reputation and proprietary information, they must now strike a balance that respects both these interests and the rights of workers to discuss their employment conditions and share their experiences.

  3. Increased Awareness: Employees, now more than ever, are being made aware of their rights in the face of legal documentation. The McLaren decision empowers them to question or challenge clauses that might seem overly restrictive or in violation of their rights.

  4. Reputational Considerations: Beyond the legal implications, companies might face reputational risks if they are perceived as trying to 'silence' former employees or prevent them from discussing potential workplace issues.

Conclusion

The NLRB's McLaren decision serves as a bellwether, signaling a shift in how the legal system views confidentiality and non-disparagement clauses in severance agreements. While companies have legitimate concerns about protecting their interests, this decision underscores the importance of ensuring that such protective measures do not trample upon the rights and freedoms of employees. Both employers and employees would benefit from a clearer understanding of their rights and obligations in light of this landmark decision.


Need Help?

As a Minnesota contracts and severance attorney, Josh Newville offers guidance to both employees and employers with questions about severance agreements. Contact him today to schedule a legal consultation.



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Joshua Newville is a Minnesota employment lawyer, civil rights attorney, and mediator. Josh litigates and advises on such matters as wrongful termination, whistleblowers, discrimination, police misconduct, and more. He offers legal consultations and online case reviews regarding employment law and civil rights.

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