NLRB, Severance Agreements, and NLRA Rights

NLRB Says Severance Agreements Cannot Force Employees to Waive NLRA Rights

Employers may not offer employees severance agreements that require them to broadly waive their rights under the National Labor Relations Act (NRLA), according to a decision issued by the National Labor Relations Board (NLRB) on Feb. 21.

NLRB’s reasoning

The decision in the case McLaren Macomb, involved severance agreements offered to furloughed employees. The agreements prohibited the employees from making statements that could disparage the employer and from disclosing the terms of the agreements. 

Simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the NLRA violates Section 8(a)(1) of the NLRA, according to the NLRB:

“We…return to the prior, well-established principle that a severance agreement is unlawful if its terms have a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights, and that employers’ proffer of such agreements to employees is unlawful.” 

In a press release, NLRB Chairman Lauren McFerran said, “It’s long been understood by the Board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights under the National Labor Relations Act. Today’s decision upholds this important principle and restores longstanding precedent.” 

Seek counsel as needed

Employers often offer departing employees severance agreements in exchange for a promise not to sue, among other things. However, as this decision illustrates, there are potential pitfalls to watch out for. Seek counsel to ensure your severance agreements are legally compliant and enforceable.

For more information

If you have questions about these changes, reach out to our Human Resources Consulting team to learn more.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2023 Applied Systems, Inc. All rights reserved.