NLRB Guidance on its Overreach in Regulating Confidentiality and Non-Disparagement Clauses in Severance Agreements

Guidance just released from the NLRB on its recent ruling that confidentiality and non-disparagement clauses in severance agreements are unlawful is not helpful for employers and hints at several other standard clauses that the NLRB may also find unlawful.

NLRB says ALL PRIOR confidentiality and non-disparagement clauses in severance agreements are unlawful. Even if entered into freely years ago. And the NLRB wants (but can’t require) employers to call past employees and let them know that those parts of the agreements no longer exist.

Confidentiality agreements targeting dissemination of trade secrets based on “legitimate business justifications” and non-disparagement clauses that prohibit maliciously untrue statements are ostensibly OK.

The NLRB GC also foreshadows finding the following clauses unlawful in severance agreements:

* Non-compete clauses

* No solicitation clauses

* No poaching clauses

* Broad liability releases and covenants not to sue that may go beyond the employer and/or may go beyond employment claims and matters as of the effective date of the agreement

* Cooperation requirements involving any current or future investigation or proceeding involving the employer as that affects an employee’s right to refrain under Section 7 of the NLRA, such as if the employee was asked to testify against co-workers that the employee assisted with filing a ULP charge.

This line of regulating severance agreements will continue for several years.

When combining these rules with the anti-non-compete position that the NLRB and FTC announced a few months ago, companies will find it very difficult to keep employees from using inside information to compete against them for a new employer.