HR Management & Compliance

Case Study: Recent NLRB Ruling Places New Restrictions On Severance Agreements

Over the years, the NLRB has taken various positions regarding what activities might “chill” an employee’s right to organize, with some directors being very narrow in their interpretation and others extremely expansive.

Severance agreement

In evaluating whether language and severance agreements “chilled” these rights in 2020, the Board looked at both the plain language of the agreement and added specific conditions that result in invalidating a severance agreement. This included some form of legal violation, such as unlawful termination, as well as demonstrating anti-union animus by the employer.

The Board has now reversed these 2020 additions with its recent ruling of McLaren Macomb, a case relating to the structure and content of severance agreements and their enforceability under the National Labor Relations Act (NLRA), stating its intention to return to a “plain language” determination.


In McLaren, a Michigan hospital furloughed multiple employees and eventually terminated their employment, providing them with severance agreements. The severance agreements contained confidentiality and nondisclosure language.

The confidentiality language concluded with a statement that the employee wouldn’t provide information except under certain circumstances including if “legally compelled to do so by a court or administrative agency of competent jurisdiction.”

The agreement also included a nondisclosure section that prohibited disclosure of confidential materials, but it also included a statement that the employee agreed not to disparage or harm the image of the employer.

The Board specifically states in the McLaren decision, “We therefore overrule both decisions [Baylor and IGT] and return to the prior, well-established principle that a severance agreement is unlawful if its terms have a reasonable tenancy to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights, and that employers’ proffer of such agreements to employees is unlawful.”

Non-Disparagement Clause

The Board took particular issue with the non-disparagement clause that prohibited the employee from making statements to the general public or others that would harm the employer’s image, finding it a clear violation of the Act.

In essence, the NLRB wanted a clearer definition of what a disparaging comment might have been under this clause. The Board stated that this was necessary because the employer had no ability to gauge what type of inappropriate or defamatory statements a former employee might make.

Unfortunately, this poses difficulty for employers because there’s no clear way to address the Board’s statements in McLaren and maintain the traditional confidentiality or non-disparagement clauses in separation agreements.

The Bottom Line for Employers

You may want consider outlining employees’ specific rights in severance agreements, including a statement allowing both the employee and employer to make any statements as required by law. Additionally, it would be best practice to specifically cite Section 7 of the NLRA.

As employers found with the varying NLRB assessments regarding statements requiring professionalism, such disclaimers aren’t perfect but can help defend the validity of any policy, practice, or severance agreement.

It’s also important to note that this appears to carry forward into a settlement of any contested claim, and potential language changes should also be included in settlement agreements.

Jo Ellen Whitney is an attorney with Dentons Davis Brown in Des Moines. You can reach her at

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