NLRB Ruling on Severance Agreements with Non-Disparagement, Non-Disclosure Terms

The National Labor Relations Board (NLRB) recently held that companies may not offer severance agreements that could have the effect of waiving rights under the National Labor Relations Act by prohibiting employees from making disparaging statements about the employer or from disclosing the terms of the agreement itself. The decision reverses the NLRB a 2020 decision that had allowed employers to offer severance agreements with confidentiality and non-disparagement provisions.  

Because the NLRB considers non-disparagement and confidentiality provisions to unlawfully restrict the ability of employees to exercise their statutory rights under the National Labor Relations Act, it warned employers against forcing employees to “choose between receiving benefits and exercising their rights under the . . . Act.”