Selective focus shooting on hand of Businessman giving pen to Partnership to sign contract agreement in document
(Credit: wera Rodsawang / Getty Images)

Employers received additional guidance about severance agreements Wednesday in a memo from National Labor Relations Board General Counsel Jennifer Abruzzo to all field offices in light of the board’s Feb. 21 decision in McLaren Macomb

An employer’s actions still can be unlawful even if an employee does not sign a proffered severance agreement, Abruzzo clarified Wednesday.

“Whether or not the employee actually signed the severance agreement is irrelevant for purposes of finding a violation of the [National Labor Relations] Act since the proffer itself inherently coerces employees by conditioning severance benefits on the waiver of statutory rights such as the right to engage in future protected concerted activities and the right to file or assist in the investigation and prosecution of charges with the board. That the employee did not sign the agreement does not render the employer’s conduct lawful,” Abruzzo wrote.

The board ruled in February that employers violate the act when they offer employees severance agreements that require employees to broadly waive their rights under the act.

“We therefore … 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,” the board said in last month’s ruling.

Section 7 of the National Labor Relations Act guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.”

The nondisclosure provision of the severance agreement in McLaren Macomb  contained a nondisparagement clause that advised employees that they were prohibited from making statements that could disparage or harm the image of the employer, its parent and affiliates, and their officers, directors, employees, agents and representatives, according to the memo. Further, employees were not permitted to disclose the terms of the agreement to anyone, except for a spouse or professional adviser, unless compelled by law to do so. Monetary and injunctive sanctions for breach of these provisions were also part of the McLaren Macomb agreement. That, according to the NLRB, violates the National Labor Relations Act. 

The Feb. 21 decision reversed previous NLRB decisions in two cases handed down in 2020, which abandoned prior precedent in finding that offering similar severance agreements to employees was not unlawful by itself. 

“Lawful severance agreements may continue to be proffered, maintained, and enforced if 

they do not have overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees” Abruzzo said. “[However], the future rights of employees as well as the rights of the public may not be waived in a way that precludes future exercise of Section 7 rights, including engaging in protected concerted activities and accessing the agency.”