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The National Labor Relations Board (“NLRB”) ruled this week in the McLaren Macomb case, a decision applicable to both non-unionized and unionized employers, that merely including standard confidentiality and non-disparagement provisions in a severance agreement violates the National Labor Relations Act (the “Act”).  The new Biden administration Board found that such provisions “interfere with, restrain, or coerce employees’ exercise” of rights under Section 7 of the Act, which protects organization, joining a union, and “other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” McLaren Macomb reverses Trump-era precedent allowing the use of confidentiality and non-disparagement clauses unless the employer separately committed an unfair labor practice by engaging in conduct that demonstrated anti-union or anti-organizing animus.

The McLaren Macomb hospital permanently furloughed eleven unionized employees during the Covid-19 pandemic. It presented the employees with a “Severance Agreement, Waiver and Release,” by which it offered to pay certain sums upon their execution of the document. The agreement released the employer from claims arising out of employment or termination of employment, proscribed disparagement of the employer, and required confidentiality as to the agreement’s terms.

The NLRB held that the mere proffer of a severance agreement having a “reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights” violates the Act, regardless of whether the employee signs the agreement or other prohibited employer conduct surrounds the proffer. It ruled that the lawfulness of a severance agreement centers on its facial language and is not dependent on external circumstances surrounding the agreement, such as an employer’s demonstrated animus towards Section 7 activity or the unlawful discharge of an employee.  

What should employers do in response to the McLaren Macomb ruling? That depends on a number of factors, including risk tolerance. It should be noted that executives, managers, supervisors, and independent contractors are not covered by the Act, and thus should not be impacted by McLaren Macomb. As to employees who do not manage or supervise departments or other employees, options include: using more limited confidentiality clauses that focus on trade secrets and truly proprietary documents/information; adding express disclaimers that nothing in the agreement is intended to impact rights under the Act; and eliminating non-disparagement provisions or reducing them to the type of relatively egregious conduct that the Board has deemed not protected under the Act. As to past agreements, employers have an argument that agreements made while Trump-era precedent was in effect should be immune from challenge based on McLaren Macomb.  Contact Tommy McGoey, Leon Rittenberg, Courtney Turkington, Kindall James, or Ben Parks for assistance in developing your company’s best approach to severance agreements and the issues raised by McLaren Macomb.

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Photo of Thomas J. McGoey II Thomas J. McGoey II

Tommy is the leader of the firm’s commercial litigation practice group and a member of the firm’s Board of Directors. He is a go-to labor and employment lawyer with experience throughout Louisiana and the U.S. With his nearly 35 years of experience, he…

Tommy is the leader of the firm’s commercial litigation practice group and a member of the firm’s Board of Directors. He is a go-to labor and employment lawyer with experience throughout Louisiana and the U.S. With his nearly 35 years of experience, he helps employers across a wide range of industries with contentious human resources claims and issues, both inside and outside the courtroom. Most recently, he has guided employers through a range of concerns related to the COVID-19 pandemic.

Photo of Benjamin "Ben" M. Parks Benjamin "Ben" M. Parks

Ben Parks is an attorney in the firm’s Business Law practice group.

During law school, Ben was a member of the Louisiana Law Review, where he served as Development Editor. Ben also served as judicial extern, in the United States District Court for…

Ben Parks is an attorney in the firm’s Business Law practice group.

During law school, Ben was a member of the Louisiana Law Review, where he served as Development Editor. Ben also served as judicial extern, in the United States District Court for the Middle District of Louisiana, to the Honorable Brian A. Jackson.

Photo of Leon H. Rittenberg III Leon H. Rittenberg III

Leon Rittenberg III is a New Orleans native. His practice focuses on serving the needs of small and mid-sized businesses and their owners; including philanthropy and non-profit law, taxation, finance, private equity, estate planning, probate, real estate, mergers and acquisitions and related matters.

Leon Rittenberg III is a New Orleans native. His practice focuses on serving the needs of small and mid-sized businesses and their owners; including philanthropy and non-profit law, taxation, finance, private equity, estate planning, probate, real estate, mergers and acquisitions and related matters. Leon represents the interests of a number of private investors, oil service businesses, marine transportation companies and physician groups. He is a Board Certified Tax Specialist and Board Certified Estate Planning & Administration Specialist, as certified by the Louisiana Board of Legal Specialization. He frequently lectures in areas such as taxation, estate planning and maritime transactions.

Leon is a Fellow of the American College of Tax Counsel. He has been recognized by Chambers USA (Louisiana Marine Finance – 2021; Louisiana Corporate/M&A: Tax section – 2017), Louisiana Super Lawyers (Tax, Estate Planning & Probate and Business/Corporate), and the Best Lawyers in America (Non-Profit/Charities Law and Trusts & Estates) since 2007, and by New Orleans Magazine as one of their “Top Lawyers of New Orleans” for his work in Equipment Finance Law, Mergers & Acquisitions Law and Tax Law. New Orleans City Business selected him for their Leadership in Law class of 2014, which “identifies and honors 50 outstanding legal professionals whose successes in law and contributions to the community have set the pace for the legal community.”