Companies Can't Put Non-Disparagement Agreements In Severance Packages, According to a New Ruling by the National Labor Relations Board

"Employers cannot ask individual employees to choose between receiving benefits and exercising their rights," chairman Lauren McFerran wrote.

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By Gabrielle Bienasz

Bloomberg / Contributor I Getty
The NLRB headquarters.

You can't agree to a rule against talking about your former company in order to get your money.

The National Labor Relations Board (NLRB) said Tuesday that employers can not ask employees to agree to non-disparagement provisions, among other things, in order to receive payments in a severance agreement.

"It's long been understood by the Board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights under the National Labor Relations Act," said Lauren McFerran, chairman of the NLRB, in the press release.

The National Labor Relations Act (NLRA) protects the rights of most privately-employed workers as far as labor organizing goes, and the right to speak about workplace conditions, which also applies to social media.

The issue stemmed from a case between a healthcare conglomerate in Michigan, McLaren Health Care Corporation, and a union that represents nurses and radiology technicians at one of the hospitals in the area, called Local 40, and part of one of the U.S.'s largest union collectives, the AFL-CIO.

The hospital in question, in Mt. Clemens, Michigan, "permanently furloughed" 11 employees in Local 40 in June 2020 in the aftermath of the pandemic, according to the decision. The severance agreement had "provisions broadly prohibiting disparagement" of the hospital, as well as financial punishment for doing so, the decision added.

Previously, in two decisions in 2020, in a shift, the NLRB said that it was not illegal to merely offer employees agreements that involved an employee giving up an NLRA-protected right. Tuesday's decision reverses that again.

This decision says that employers essentially can't ask employees to give up rights protected by the NLRA.

"The Board observed that the employer's offer is itself an attempt to deter employees from exercising their statutory rights, at a time when employees may feel they must give up their rights in order to get the benefits provided in the agreement," the release added.

Gabrielle Bienasz

Entrepreneur Staff

Gabrielle Bienasz is a staff writer at Entrepreneur. She previously worked at Insider and Inc. Magazine. 

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