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NLRB strikes down Trump-era severance agreement rulings


Terminated employees cannot be prohibited in severance agreements from making disparaging statements about their former employer or disclosing the agreement’s terms, the National Labor Relations Board ruled Tuesday in striking down a pair of decisions during the Trump administration.

An employer attorney said the ruling was expected in light of the change in administration.

The case was filed by a union on behalf of 11 employees of McLaren Macomb, a Mount Clements, Michigan, hospital, who were first temporarily, then permanently, furloughed in response to the COVID-19 pandemic. The case is McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees International Union, AFL-CIO.

The decision overturned a 3-1 ruling issued by a Republican-dominated board in March 2020 in Baylor University Medical Center and Dora S. Camancho in which it held that a non-disparagement provision was lawful.

That ruling was affirmed by the board in a November 2020 ruling involving a London-based company in IGT d/b/a International Game Technology and International Union of Operating Engineers Local Union 501, AFL-CIO.

Tuesday’s ruling, which partially overturned an administrative judge’s decision, was approved by the NLRB by a vote of 3-1,  with Republican Marvin E. Kaplan dissenting. 

The NLRB said in a statement that the Baylor and IGT decisions “abandoned prior precedent” and that “simply offering employees a severance agreement that requires them to give up their rights” violates the National Labor Relations Act‘s Section 7, which guarantees workers the right to self-organize.

“The board observed that the employer’s offer is itself an attempt to deter employees from exercising their statutory rights, at a time when employees may feel they must give up their rights in order to get the benefits provided in the agreement,” the statement 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 NLRA, it said.

Mr. Kaplan’s dissent said “Baylor and IGT were sound, pragmatic decisions fully consistent with the (NLRA), and colleagues have failed to establish sufficient grounds” for overturning them.

Joshua H. Viau, regional managing partner with Fisher Phillips LLP in Atlanta, said, “We’ve seen this one coming. There’s going to be more scrutiny under this board of all employee policies and procedures and language,” which will “swing the pendulum back to where it was in the pre-Trump era.”

Mr. Viau said companies’ reaction to the rule “really depends on the employer’s risk tolerance,” because the decision “doesn’t give a whole lot of insight” as to how to proceed.

“I don’t necessarily think” that employers need to reissue prior agreements,  he said, “but I do think that it’s prudent to revise language in the severance agreements going forward to at least put some disclaimer in place to get some protection that way.”