Overbroad non-disparagement clauses, recent NLRB rulings have reshaped how employers approach severance agreement terms, especially confidentiality and non-disparagement provisions. The National Labor Relations Board (NLRB) has ruled that overly broad confidentiality and non-disparagement provisions can violate the National Labor Relations Act (NLRA) by unlawfully restricting employees’ statutory rights to engage in protected concerted activity.
In this post, we’ll explain these rulings, their impact on employers, and how to draft compliant agreements.
The National Labor Relations Act (NLRA)
The National Labor Relations Act (NLRA) protects employees’ rights to engage in concerted activities for mutual aid or protection. This includes discussing wages, workplace conditions, and assisting fellow employees in asserting their rights.
Section 7 of the NLRA guarantees these statutory rights, while Section 8 makes it an unfair labor practice for an employer to interfere with them.
The National Labor Relations Board (NLRB)
The National Labor Relations Board (NLRB) enforces the NLRA. It investigates unfair labor practice charges and issues decisions that shape labor law across the U.S. Recent decisions have focused on confidentiality and nondisparagement clauses in severance agreements and settlement agreements.
The Problem of Overbroad Confidentiality and Non-Disparagement Clauses
Overbroad confidentiality and non-disparagement clauses can often become challenging to understand. However, before going to an employment lawyer for it, we recommend educating yourself on the matter.
Severance Agreements and Employee Rights
Severance agreements often include confidentiality clauses and non-disparagement provisions to limit what former employees can say about their employer. While employers have legitimate interests in protecting confidential information and reputation, such provisions can go too far.
When confidentiality and nondisparagement clauses are overly broad, they may preclude employees from discussing workplace issues, filing unfair labor practice charges, or assisting fellow employees with employment claims.
Unlawful Provisions
The NLRB has held that a confidentiality provision is unlawful under the NLRA is one that has a reasonable tendency to chill employees from exercising their statutory rights. Similarly, non-disparagement provisions that prevent employee statements about working conditions, labor policies, or unlawful conduct are problematic.
Recent Key Rulings on Overly Broad Provisions
In Baylor University Medical Center, the NLRB found that a severance agreement contained unlawfully overbroad confidentiality and nondisparagement clauses. The Board ruled these provisions restricted former employees from discussing terms and conditions of employment or filing complaints with the Board.
Even though the employer claimed the provisions only applied to post-employment behavior, the Board found they unlawfully interfered with employees’ rights.
International Game Technology
In International Game Technology, the NLRB again ruled that nondisparagement provisions in severance agreements violated the NLRA. The Board emphasized that any term with a reasonable tendency to deter employees’ rights—even for former employees—can be an unfair labor practice.
NLRB General Counsel Memorandum
Following these decisions, the NLRB General Counsel issued a memorandum clarifying that offering or maintaining severance agreements with unlawfully overbroad confidentiality and nondisparagement provisions is itself an unfair labor practice.
What Makes a Clause Overbroad?
Examples of Overly Broad Provisions
- Confidentiality provisions that prevent discussing employment terms, labor practices, or unlawful conduct.
- Non-disparagement provisions barring any negative statements about the employer’s employees, officers, directors, agents, or affiliated entities without limits.
- Clauses that preclude employees from communicating with other employees or third parties, including the NLRB or media.
Unlawful Provision Contained in Entire Agreement
The Board has held that if an unlawful provision contained in a severance agreement is not severable, the entire severance agreement can be found unlawful. Employers must ensure that severability clauses allow courts or agencies to strike offending provisions without voiding the entire agreement.
Common Issues in Severance Agreements
Severance agreements can pop up for anyone. It can include officers, directors, employees, agents, or a third person related. This causes individuals to learn about their severance and other employees’ statutory rights if the employer violates them in any way.
Broad Liability Releases
Broad liability releases that waive statutory rights under the NLRA are unenforceable. Agreements cannot require employees to surrender the right to file unfair labor practice charges or testify in investigations.
Overbroad Confidentiality and Nondisparagement Clauses
Clauses that go beyond protecting legitimate business interests can deter employees’ rights to organize, protest, or critique employer policy.
Lack of Disclaimer Language
Agreements often lack disclaimer language clarifying that nothing precludes exercising statutory rights. Without such disclaimers, confidentiality and nondisparagement provisions risk being found unlawful.
Fortunately, an experienced employment lawyer can help understand and tackle these challenges in a suitable manner. However, there are other pointers that employers should remember while taking action.
What Employers Should Do
Once the employee acknowledges or if an employee promises to leave, there’s no space for mixed or inconsistent messages. Moreover, the employee’s conduct or other factors shouldn’t impact this decision. Otherwise, it may count as unlawful proffer. Similarly, prohibited employees should know about collective bargaining and solicitation clauses to further increase their chances.
Use Narrowly Tailored Language
Employers should draft confidentiality and non-disparagement terms to be narrowly tailored. For example:
- Limit non-disparagement provisions to defamatory or malicious falsehoods stated with reckless disregard for the truth.
- Define confidentiality provisions to exclude discussions about wages, workplace conditions, or unlawful conduct.
Include Disclaimer Language
Employers should add clear disclaimer language preserving employees’ statutory rights under the NLRA.
Example: “Nothing in this agreement limits your rights to discuss employment terms or file complaints with the NLRB or other agencies.”
Use Savings Clauses
A strong savings clause can help preserve the validity of the entire severance agreement by allowing a court to strike unlawful provisions while keeping the rest enforceable.
Consider Temporal Limitation
Employers can use temporal limitation (e.g., limiting obligations to a set number of years) to reduce the chilling effect of non-disparagement provisions.
Risks of Violating the NLRA
Unfair Labor Practice Charges
Employers offering unlawfully overbroad severance agreements can face unfair labor practice charges. The NLRB can order rescission of agreements, notification to former employees, and training for management.
Federal Court Enforcement
In some cases, the NLRB may seek enforcement of remedies in federal court, adding legal costs and reputational risks.
Settlements and Previously Entered Severance Agreements
The NLRB’s position applies even to previously entered severance agreements. Employers may be required to notify former employees that unlawful provisions will not be enforced.
Settlement agreements must also avoid overly broad confidentiality and non-disparagement terms that violate employees’ rights.
Conclusion: Overbroad Non-Disparagement Clauses Recent NLRB Rulings
Overbroad non-disparagement clauses, recent NLRB rulings remind employers that severance agreements must respect employees’ statutory rights under the National Labor Relations Act. The NLRB has made clear that overly broad confidentiality and nondisparagement provisions are an unfair labor practice if they deter employees from speaking out about wages, working conditions, or unlawful conduct.
Employers should review existing templates, add disclaimer language, use narrowly tailored terms, and consult legal counsel to avoid risk.
Need Help Reviewing Your Severance Agreements?
Contact the Bourassa Law Group today. Our experienced team will help you draft compliant severance agreements that protect your business interests while respecting employee rights under the NLRA. Let us help you navigate these evolving legal requirements with confidence
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