Severance Agreement? What You Should Know.

By Jenna Asarese, Law Clerk
It has been 3 years since the Trump-appointed National Labor Relations Board (NLRB) overturned years of precedent in the Baylor University Medical Center and IGT d/b/a International Game Technology cases.1 Baylor and IGT only made broad confidentiality and non-disparagement provisions in severance agreements an unfair labor practice if the company implemented the provisions as a way to punish workers for union organizing or engaging in protected activity.2

In February 2023, the Biden-appointed NLRB reversed Baylor in McLaren Macomb, returning to the previous standard that severance agreements cannot contain provisions which generally may reasonably affect rights granted by section 7 of the NLRA; no separate unfair labor practice is needed.3 Section 7 guarantees an employee’s 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,” or to ” refrain from any or all such activities.”4

As the NLRB is a political tool for the sitting president, this reversion was expected. President Biden claims to be a more union-friendly politician and appointed the board accordingly.5 The General Counsel of the NLRB even highlighted the Baylor and IGT decisions in a 2021 memo as being areas of consideration for the current NLRB as part of a “doctrinal shift.”6 In its holding, the NLRB established that employers cannot force employees to waive their section 7 rights under the National Labor Relations Act (NLRA).7 The NLRB held once more 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, and that employers’ proffer of such agreements to employees is unlawful.”8

As such, confidentiality and non-disparagement provisions in severance agreements which broadly restrict an employee’s right to organize will likely not be permissible. Particularly at issue in McLaren Macomb, was that the confidentiality agreement restricted disclosure to third parties, even labor unions, and that the non-disparagement agreement was not limited in scope both in terms of subject or timing.9 Furthermore, the board took issue with the lack of a definition for “disparagement.”10

Employers can still be charged with an unfair labor practice even if the company does not intend to enforce said provisions. The McLaren Macomb decision held that even offering an individual the severance agreement with unlawful provisions was enough to coerce former employees from engaging in their section 7 rights.11

It should be noted that not all workers are protected by the NLRA. Not covered by the NLRA are public-sector employees, agricultural workers, domestic workers, independent contractors, workers employed by a parent or spouse, employees of air and rail carriers covered by the Railway Labor Act, and supervisors (with some exceptions). 29 U.S.C. §152(3)

As a result of this decision, employees leaving their company should carefully look through any offered severance agreement for these prohibited provisions. Any inclusion of a confidentiality agreement or non-disparagement agreement should not be overly broad and should not restrict your section 7 rights. If you believe your agreement contains such provisions, it is imperative to file a charge as soon as possible. The NLRA only has a 6 month statute of limitations; this means the company is not liable for any unfair labor practices more than 6 months old.12

1 369 NLRB No. 43 (2020); 370 NLRB No. 50 (2020).
2 Id.
3 372 NLRB No. 58 (2023).
4 29 U.S.C. §157.
5 Alyssa Fowers, Biden Talks Like the Most Pro-Union President Since the New Deal, The Washington Post (April 30, 2021),
6 GC 21-04
7 372 NLRB No. 58 (2023).
8 Id.
9 372 NLRB No. 58 (2023)
10 Id.
11 Id.
12 29 U.S.C. §160(b).