Earlier this month, the National Labor Relations Board (“NLRB”) issued its decision in McLaren Macomb, 372 NLRB No. 58 (2023), holding that not only are most non-disparagement and confidentiality clauses signed by employees covered by the National Labor Relations Act (“Act”) void as a matter of policy, but merely including one in a proposed severance agreement to an employee violates the Act.

The decision left a number of questions to be answered as to how this decision would be enforced going forward, and, on March 22, 2023, National Labor Relations Board General Counsel Jennifer Abruzzo issued a Memorandum to Regional Directors proving, once again, that the current Board would be taking an extremely aggressive, pro-employee perspective on enforcement.

While this Memorandum does not have the same effect as a NLRB decision, it sheds light on how the Office of the General Counsel and the Regions will respond to potential unfair labor practice charges concerning these issues and gives plaintiffs’ and union counsel a strong basis for resisting any effort to include non-disparagement and confidentiality provisions in future agreements.

According to the General Counsel:

  • The decision applies retroactively. GC Abruzzo noted that agreements entered into prior to February 21, 2023 could be invalidated because the NLRB did not state that “manifest injustice” prevents retroactive application.  Section 10(b) of the Act provides for a six (6) month statute of limitations, but GC Abruzzo stated that she viewed an employer as committing a continuing violation for maintaining and/or enforcing a previously-entered severance agreement with unlawful provisions.  This interpretation could effectively extend the limitations period beyond six months.  Abruzzo remarked that employers may consider remedying potential violations now by proactively contacting former employees subject to severance agreements that contain overly broad provisions and advising them that the provisions are null and void and that the employer will not seek enforcement of such restrictions.  In the case a charge is subsequently filed, Abruzzo noted that such measures could form the basis for consideration of a merit dismissal by the NLRB.
  • Confidentiality provisions are lawful under only limited circumstances. According to GC Abruzzo, lawful confidentiality provisions in separation agreements must be: (1) “narrowly tailored”; (2) targeted to proprietary or trade secret information; (3) limited in temporal scope; and (4) based on legitimate business justifications.
  • Only “non-defamation” clauses are lawful now. GC Abruzzo stated that “public statements by employees about the workplace are central to the exercise of employees’ rights under the Act.”  With this as the backdrop, she observed that a “narrowly-tailored, justified, non-disparagement provision that is limited to employee statements about the employer that meet the definition of defamation as being maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity, may be found lawful.”
  • Unlawful provisions are severable—even without a severability clause. GC Abruzzo noted that Regions should seek to have offending provisions voided out of the agreement, as opposed to nullifying the entire agreement—regardless of whether the agreement contains a severability clause.
  • This is not waivable. So, you cannot propose or negotiate a clause with a Union or an employee’s counsel.  GC Abruzzo reiterated multiple times that the Board “protects public rights that cannot be waived in a manner that prevents future exercise of those rights regardless of who initially raised the issue.”  She concluded, therefore, that even if employees themselves request broad clauses or a Union agrees to such provisions in separation agreements, such provisions remain unlawful.
  • A “savings clause” or disclaimer will not save overbroad provisions. Abruzzo suggested that, without an express statement of the rights afforded to employees under the Act, a clause or disclaimer indicating that certain provisions “do not apply to an employee’s Section 7 rights” would not save overbroad language.
  • While the decision generally applies to severance agreements proffered to statutory “employees” under the Act, it could stretch to supervisors and managers in one very limited situation. While GC Abruzzo conceded that “supervisors are generally not protected by the Act,” she noted that Board precedent protects supervisors from retaliation if the supervisor refuses to act on the employer’s behalf in committing an unfair labor practice.  In such a case, GC Abruzzo posited that a separation agreement offered to a supervisor in connection with that supervisor’s protected conduct could be subject to the standards set forth in McLaren.
  • Other types of provisions may be at risk. Abruzzo also suggested that non-compete clauses, non-solicitation clauses, no-poaching clauses, and other similar provisions might interfere with employees’ Section 7 rights and could be subject to future challenge and evaluation by her Office.

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This guidance from the General Counsel’s Office provides helpful insight into how the General Counsel and the Regions likely will view a number of issues associated with the McLaren decision.  However, it remains to be seen how the NLRB and, eventually, the Courts will evaluate these issues when presented in pending cases.

Please stay tuned for further developments regarding these important issues, or reach out to any of us with specific questions you may have.

 

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Photo of Michael Lebowich Michael Lebowich

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional…

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional labor law.

Michael acts as the primary spokesperson in collective bargaining negotiations, regularly handles grievance arbitrations, assists clients in the labor implications of corporate transactions, and counsels clients on union organizing issues, strike preparation and day-to-day contract administration issues. He also has significant experience in representation and unfair labor practice matters before the National Labor Relations Board.

His broad employment law experience includes handling of race, national origin, gender and other discrimination matters in state and federal court. A significant amount of his practice is devoted to counseling clients regarding the application and practical impact of the full range of employment laws that affect our clients, including all local, state and federal employment discrimination statutes, the Fair Labor Standards Act, the Family and Medical Leave Act, and state labor laws.

Michael has substantial experience in a wide variety of industries, including entertainment, broadcasting, newspaper publishing and delivery, utilities and lodging. He represents such clients as The New York Times, BuzzFeed, ABC, the New York City Ballet, PPL, Pacific Gas & Electric, Host Hotels and Resorts, and The Broadway League (and many of its theater owner and producing members).  Michael also has significant public sector experience representing, among others, the City of New York and the Metropolitan Transportation Authority.

Michael is a frequent guest lecturer at Columbia Business School, the Cornell School of Hotel Administration, the New York University Tisch School for Hospitality, Tourism and Sports Management, and is an advisory board member of the Cornell Institute for Hospitality Labor and Employment Relations.

Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Photo of Alexander J. Blutman Alexander J. Blutman

Alexander J. Blutman is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

Alex earned his J.D. cum laude from Harvard Law School, where he was Co-Managing Editor of the Harvard Journal of Sports & Entertainment

Alexander J. Blutman is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

Alex earned his J.D. cum laude from Harvard Law School, where he was Co-Managing Editor of the Harvard Journal of Sports & Entertainment Law and Co-Producer of the Harvard Law School Parody. While at Harvard, Alex spent time as a legal intern with the UNLV Athletics Department, Special Olympics International, and the National Football League.

Prior to law school, Alex worked as a paralegal at an Am Law 100 law firm. He graduated from Duke University, where he served as a student-manager for the men’s basketball team.