EMPLOYMENT LAW UPDATE: A recent NLRB decision severely limits the use of non-disparagement clauses in employment relationships

By Danny De Voe, Esq.

Non-disparagement clauses have long been used in new hire paperwork, employee handbooks and separation agreements to preserve the reputation of the employer in the public eye during and after employment. Until recently, the National Labor Relations Board (“NLRB”) generally permitted the use of non-disparagement clauses in separation agreements, absent evidence that inclusion of such a clause was an overt attempt to interfere with an employee's right to collectively bargain. See Baylor University Medical Center, 369 NLRB No. 43 (2020); IGT d/b/a International Game Technology, 370 NLRB No. 50 (2020). However, a February 2023 decision of the NLRB overruled its prior holdings, finding that a broadly written non-disparagement clause included in a separation agreement could be an unlawful violation of §8(a)(1) of the National Labor Relations Act (“NLRA”) if it infringed upon the departing employee’s right to collaborate with existing employees to improve their working conditions. See McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, Internation­al Union (OPEIU), AFL-CIO, Case 07-CA-263041, 372 NLRB No. 58 (Feb. 21, 2023).

In McLaren Macomb, the employer furloughed eleven union employees in the wake of the COVID-19 pandemic after performance of elective and outpatient services were suspended. Id. In July 2020, the employer permanently furloughed those eleven employees, presenting them with separation agreements that contained broad non-disparagement language which prohibited the employees from making statements to the other employees or to the general public that could disparage or harm the image of the employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives, without first consulting with the union. Id. Under the prior Baylor decision, such language would be permissible unless there was evidence that the employee was terminated in violation of the NLRA. However, the Board in McLaren Macomb stated that an unlawful termination decision was not a prerequisite to finding that non-disparagement language in a separation agreement unlawfully interfered with, restrained, or prevented an employee’s exercise of their rights under NLRA §7. The Board further stated in McLaren Macomb that a current employment relationship was also not required to violate the NLRA as an employer could violate the NLRA by prohibiting former employees from collectively bargaining with current employees.

Did the McLaren Macomb decision ban the use of all non-disparagement clauses in employment relationships? No, it did not. First and foremost, it is important to remember that the NLRA still does not pertain to employees in supervisory positions. See NLRB GC Memorandum 23-05 (3-22-23). Additionally, the decision in McLaren Macomb permits non-disparagement language that does not interfere with, restrain or prevent an employee’s rights under the NLRA. Id. More particularly, the McLaren Macomb decision did not ban non-disparagement language that is narrowly tailored and justified to limit employee statements that are disloyal, reckless or maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity. Id. Does the McLaren Macomb decision only impact non-disparagement clauses in separation agreements? No, it impacts all employer communications from the offer letter to post-termination agreements. As such, if your employment documents contain non-disparagement language, it is time to have your legal representative review all affected documents to ensure that they are in compliance with the NLRB decision in McLaren Macomb.