Employees presented with a severance agreement should be aware of a National Labor Relations Board (NLRB) decision with significant implications. In a February 2023 ruling, the Board deemed confidentiality and non-disparagement provisions in severance agreements unlawful when presented to employees protected by Section 7 of the National Labor Relations Act (NLRA).

The NLRB reasoned that these provisions stifle employees’ exercise of their rights under Section 7, which guarantees workers the right to self-organize, form labor unions, bargain collectively, engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection, and refrain from any or all of such activities.

The Board took aim at severance agreements’ use of non-disparagement clauses that broadly prohibit employees from making negative statements about the employer. Such clauses, the Board held, have a “chilling effect” on employees’ ability to discuss workplace conditions with each other, which is a crucial aspect of organizing and collective action.

Confidentiality provisions also came under fire. The Board determined these clauses could prevent employees from:

  • Disclosing the existence of potentially unlawful provisions in the agreement, hindering their ability to file unfair labor practice charges.
  • Discussing the terms of their severance agreements with former colleagues who might be considering similar agreements.
  • Talking to union representatives or other employees about organizing efforts.

The NLRB’s decision applies not only to future severance agreements but also retroactively to agreements already signed, as long as the employer attempts to enforce the confidentiality or non-disparagement provisions. It is worth noting that these provisions are still allowable for those leaving a supervisory position, with limited exceptions.

The ruling presents a victory for workers, as employers can no longer ask individual employees to choose between severance benefits and exercising their rights under the National Labor Relations Act. If you are an employee in Illinois, you should be aware of the restrictions on severance agreement. If you are asked to sign a such an agreement to receive post-employment benefits, you should review it carefully with an attorney before signing. Emery Law’s Ethan White is an employment attorney who regularly counsels employees presented with severance agreements, and helps them negotiate favorable terms for the same. If you are dealing with workplace issues, you need an employment lawyer who will explain your rights and help you choose the best path forward.