NLRB unmuzzles ex-employees who signed nondisparagement deals                

Employees shouldn’t be bound by broad confidentiality and nondisparagement provisions that muzzle their ability to speak out against a former employer as a condition for their severance payout.

That’s what the National Labor Relations Board has said in a recent ruling that limits the extent employers can use confidentiality and nondisparagement clauses in severance agreements.

Reversing two Trump-era rulings, the board determined that requiring employees to sign such broadly written clauses is in violation of federal law under the National Labor Relations Act.

“This decision changes the ballgame completely,” says Edgar Ndjatou, executive director of Washington-based Workplace Fairness, an advocacy organization for employee rights.

He said up until this decision came out, it was standard practice for employers to add these restrictions to severance agreements and subsequently prevent employees from talking about negative experiences.

This inhibited their ability to “advocate for change of employment practices, culture, and the way they might do business,” Ndjatou says. He added that employees should be allowed to talk about things that were said to them they feel was in violation of the law.

The NLRB ruling was a decision involving severance agreements offered to furloughed employees from a Michigan hospital that prohibited them from making statements that could disparage the employer and from disclosing the terms of the agreement itself. See https://tinyurl.com/2zhjjudw

The decision returns “to long-standing precedent holding that employers may not offer employees severance agreements that require employees to broadly waive their rights under the National Labor Relations Act,” according to NLRB. 

It reverses previous board decisions made in 2020 during President Donald Trump's administration that maintained that such agreements were lawful, says Jessica Baquet, a labor and employment attorney at Ruskin Moscou Faltischek in Uniondale. 

This decision reinforces employees' rights under Section 7 of the National Labor Relations Act, which “guarantees most private sector employees the right to join together, informally or by unionizing, to make concerted efforts to promote their interests in the workplace,” she says. Those interests might concern, among other things, wages, schedules and other working conditions, she says.

With limited exceptions, the NLRA protects all employees other than government workers, agricultural laborers, independent contractors and supervisors, Baquet says.

Given this decision, employers should consider eliminating nondisparagement and confidentiality provisions when they aren’t genuinely needed, she says.

When necessary, these clauses should be drafted narrowly and provide for exceptions permitting employees to make disclosures in response to lawful subpoenas or investigatory requests from a government agency, or in furtherance of concerted activity protected by the NLRA, Baquet says.

Also, companies should focus on “creating a culture that is collaborative and inclusive and deals swiftly with violations of psychological safety,” says Sarah Morgan, director of equity and inclusion at Humareso, a Vero Beach, Florida-based HR consultancy and services firm.

Instead of trying to silence employees who want to speak about discriminatory practices or an alleged sexual predator in the workplace, organizations should work to correct the problems internally, she says.

Often by making employees sign nondisparagement clauses, they stay quiet, and that perpetrator continues the cycle of harassment for years "so much so the pattern of behavior either goes unnoticed or gets buried over time and the individual that does the harassing gets away with it," Morgan says.

Nondisparagement clauses, she found, became more common in severance agreements around 2010-2011 when more employees started to take to social media to speak out.

But keep in mind this doesn’t mean employees can engage in slander or tell lies, says Christine Malafi, senior partner and chair of the corporate department at Campolo, Middleton & McCormick LLP in Ronkonkoma.

Unprotected is speech that is "reckless or maliciously untrue,” she says.

Also, this doesn’t stop employers from drafting narrower agreements protecting their trade secrets, Malafi says.

A March 22 memo from the NLRB's general counsel said the ruling covers past as well as current and future severance agreements, she says.

She says while many companies still use nondisparagement clauses in severance agreements, their use is declining. And over the last couple of years “more employees are calling out nondisparagement clauses,” Malafi says.

“They say: we won’t sign it with that in it,” Malafi says.

Ex-employees freed to speak out still need to be mindful in their approach, says Ndjatou.

“Be truthful because you don’t want to be slapped with a defamation suit,” he says. “You want to come across as credible.”

By Jamie Herzlich

jherzlich@aol.com

Herzlich writes the Small Business column in Newsday.