The National Labor Relations Board has reversed its prior precedent, holding that confidentiality and non-disparagement clauses in severance agreements for non-managerial employees can violate an employees basic right to discuss terms and conditions of employment under Section 7 of the National Labor Relations Act – even if the employee is not covered by a union. Though traditionally linked to union activity, Section 7 of the National Labor Relations Act guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.”

The new standard was set forth in McLaren v. Macomb, 372 NLRB 58, as issued in February 2023. The decision does not, on its face, outlaw all confidentiality provisions, but it does take issue with broad language that prohibits the employee from discussing the terms of the agreement with any third party. The Board reasoned that an absolute ban that prohibits employees from discussing the terms of the agreements with co-workers or union representatives could produce a chilling effect that would discourage employees from bringing charges before the Board, co-operating with Board investigations or assisting their co-workers who were subjected to unlawful actions. Note that the NLRB’s ruling generally does not pertain to Supervisory personnel who have general managerial authority such as the right to hire, discipline and fire employees.