NLRB GC Takes Broad View of the McLaren Macomb Decision

The General Counsel for the National Labor Relations Board (the “NLRB”) recently issued Memorandum GC 23-05 (the “Memorandum”), expansively interpreting the reach of the McLaren Macomb (“McLaren”) decision and raising more questions about how companies can lawfully use non-disparagement and confidentiality clauses going forward. As we previously reported, in McLaren, the NLRB foundthat non-disparagement and confidentiality provisions in a severance agreement violated the National Labor Relations Act (“NLRA”), where those provisions had “a reasonable tendency” to interfere with employee NLRA Section 7 rights. Although the Memorandum clarifies some points from McLaren, the General Counsel provides no examples of lawful confidentiality and non-disparagement provisions and seeks to expand the reach of McLaren beyond the facts of that case to cover other types of employment agreements and provisions. Companies should carefully consider the Memorandum when drafting, offering, or enforcing non-disparagement and confidentiality provisions with current and former employees.

The General Counsel’s Memorandum

Styled in a question-and-answer format, the Memorandum provides the NLRB General Counsel’s interpretation of common questions relating to the McLaren decision. On a positive note, the Memorandum clarifies a few issues.

• McLaren does not invalidate severance agreements. The General Counsel acknowledges that employers may continue to offer, maintain, and enforce severance agreement that do not have overly broad provisions that “affect the [NLRA] rights of employees.”

• An unlawful provision does not invalidate the entire agreement. The General Counsel notes that if a severance agreement contains overbroad provisions that violate the NLRA, the NLRB Regions would generally seek to have those provisions voided, as opposed to voiding the entire agreement, even without a severability clause in the agreement.

Much of the Memorandum, however, underscores the NLRB’s broad view of the McLaren decision and signals that the NLRB will likely take an aggressive enforcement posture towards non-disparagement and confidentiality provisions.

• Employment agreements, such as offer letters, and “communications” that contain non-disparagement and confidentiality provisions are subject to McLaren. The General Counsel concludes that overbroad provisions in “any employer communication to employees” that tend to interfere with, restrain, or coerce employees in the exercise of their NLRA Section 7 rights would be unlawful “if not narrowly tailored to address a special circumstance justifying the impingement on workers’ rights.”

• McLaren applies to overbroad agreements with supervisors. Despite recognizing that the NLRA does not apply to supervisors and managers, the General Counsel says that the NLRA prohibits retaliation against supervisors for refusing to violate the NLRA, including for refusing to offer unlawful non-disparagement or confidentiality provisions to employees or requiring supervisors to sign provisions that limit their rights to participate in NLRB proceedings.

• McLaren applies retroactively. Although the General Counsel recognizes the NLRA’s six-month statute of limitations for filing an unfair labor practice charge, the General Counsel says that “maintaining and/or enforcing a previously-entered severance agreement” entered six-months before the McLaren decision could constitute a continuing NLRA violation, which may provide a basis for a timely unfair labor practice charge. The Memorandum notes that, “while it may not cure a technical violation of an unlawful proffer,” employers should consider remedying a prior violation by contacting former employees who received severance agreements containing overly broad confidentiality and/or non-disparagement provisions to advise them that the provisions are null and that the employer will not seek to enforce them.

• Reinforces McLaren’s “narrowly tailored” standard, without providing examples of enforceable provisions. The Memorandum does not provide examples of potentially lawful non-disparagement and confidentiality provisions. Instead, the General Counsel reiterates the vague guidance from McLaren that non-disparagement provisions should have a temporal limit and only include defamatory statements, such as statements that are “maliciously untrue” or made with knowledge of their falsity or reckless disregard for their truth or falsity. The Memorandum also notes that confidentiality provisions that only prohibit disclosure of financial terms or proprietary/trade secret information and have a temporal limitation may be lawful. The Memorandum notes that clauses that prohibit employees from communicating with the NLRB, a union, a legal forum, the media, or other third parties are unlawful.

• Overbroad provisions are unlawful even if the employee requests them. The General Counsel says that non-disparagement and confidentiality clauses would be unlawful even if requested by employees because “the NLRB protects public rights that cannot be waived in a manner that prevents future exercise of those rights regardless of who initially raised the issue.”

The Memorandum also raises a number of questions for employers.

• A savings clause for NLRA rights does not necessarily cure overbroad provisions. The General Counsel suggests that to the extent a savings clause is included in the agreement, it “should focus on Section 7 activities that are of primary importance” for NLRA purposes. Yet, the General Counsel does not provide an example of a savings clause that the NLRB finds acceptable.

• Non-competes, non-solicits, broad releases, and cooperation clauses may be covered by McLaren. Without any apparent rationale, the General Counsel says that other provisions in employment agreements, such as non-competes, non-solicits, broad releases, and cooperation clauses, could be unlawful under McLaren if they could interfere with employees’ exercise of their NLRA Section 7 rights.

Employer Takeaways

Employers should revisit their use of non-disparagement and confidentiality provisions with employees in light of this guidance. Depending on the employer’s preferences, the employer’s risk tolerance, and the employees at issue, employers may want to consider removing those provisions or taking a more surgical approach to narrowing or limiting non-disparagement and confidentiality provisions in agreements with employees. As employers think through the right approach, they should keep several points in mind in addition to our recommendations for our prior post.

• Consider the Scope of Savings Clauses. Although neither the NLRB in McLaren nor the General Counsel in her Memorandum addresses whether a saving clause of NLRA rights would save otherwise overbroad non-disparagement and confidentiality provisions, both left the door open for that possibility. Unfortunately, the General Counsel provides no clear guidance on what carveout might save such provisions. Instead, she identifies nine specific NLRA rights she views as being of “primary importance.” Employers should consider the scope and expansiveness of any savings clause for non-disparagement and confidentiality clauses in employment agreements. Given that the NLRB may also review non-competes, non-solicits, cooperation clauses, and other provisions as well as agreements with supervisors to see if they potentially interfere with NLRA rights, employers should also consider using savings clauses of NLRA rights for those types of provisions with all employees, including supervisors.

• Proceed Cautiously Before Enforcing Prior Agreements. Because the General Counsel has indicated that McLaren applies retroactively, employers should proceed cautiously and consider consulting with counsel before seeking to enforce any non-disparagement or confidentiality clauses that were in place before the McLaren decision, even if they were entered into before the NLRA’s six-month statute of limitations.

• Evaluate and Determine How to Use Confidentiality and Non-Disparagement Provisions. If employers decide to use these provisions, they should review the General Counsel’s guidance to see if there might be ways to limit those provisions in a manner that would still meet their business objectives. For example, employers might consider adding a temporal limitation, limiting the definition of disparagement, and only having confidentiality clauses that cover financial terms and confidential information.

• Remember McLaren May Be Overturned. It also is worth noting that there could be further legal guidance on McLaren since the appeals process for that decision is not yet over. Pending such challenge, McLaren will likely remain the law unless or until a new Republican-controlled Board overturns it.