There are two reasons that I do not write blog articles about severance packages. First, there are rarely any earth-shattering developments that would justify a blog article. Second, while severance packages contain quite a bit of boilerplate language, each severance package has to be analyzed separately in the context surrounding the separation of a particular employee from a particular employer. Thus, writing a ‘generic’ blog article about severance packages would provide limited value to a reader.
However, big news based upon a decision by the National Labor Relations Board. As a result of the decision in the case of McLaren Macomb, employers potentially violate Section 8(a)(1) of the NLRA if a severance agreement is conditioned on confidentiality and non-disparagement provisions. These provisions were not only common, but practically automatic in severance packages for the past decade.
It is worth noting that even though most people associate the NLRB as affecting unionized workplaces, this particular decision impacts both unionized and non-unionized workplaces.
It is also worth noting that a company may violate the NLRB for simply offering an employee a severance package with these provisions, even if the company doesn’t seek enforcement for same.
What’s next? First, it is important to recognize that polics does play a role in administrative decisions. This NLRB is said to reflect the Biden’s administrations philosophy on worker’s rights, whereas the more restrictive approach was more reflective of the Trump administration’s approach to workers’ rights. The pendulum can (and at some point probably will) swing in the other direction. Second, it is possible that employers will endeavor to work around this pro-employee decision by using written disclaimers in their severance package offers.
Finally, the NLRB has a procedural rule limiting claims to a violation within the past 6 months. Thus, severance package agreements that were signed more than 6 months ago will not be affected. It is possible, although this author thinks it doubtful, that an employee who signed a severance package within the past 6 months will seek to rescind the agreement so as to enjoy the additional rights afforded by the McLaren Macomb decision. Employees are, understandably, motivated by self-interest and not altruism.
Stay tuned for updates.
Managing Partner of Davis & Davis, P.C.