NLRB Rules Employers May Not Ask For Broad Non-Disclosure And Confidentiality Terms

The National Labor Relations Board issued a decision on February 21 holding that employers violate the rights of employees under the National Labor Relations Act whenever the employer includes broad non-disclosure or broad confidentiality terms in severance agreements. McLaren Macomb, 372 NLRB No. 58. This ruling overturns prior NLRB decisions that expressly ruled that merely asking employees to sign agreements with non-disclosure or confidentiality terms is not an unfair labor practice, unless there is evidence that the company unlawfully targeted employee rights or committed related unfair labor practices.  

The decision applies to employees of unionized and non-unionized companies. It does not apply to supervisors as defined in the Act, executives or independent contractors. The decision casts considerable doubt on the common practice of including non-disclosure and confidentiality terms in employee severance agreements. Employers now must choose between avoiding such terms in severance agreements, or attempting to modify and narrow such terms to create an exception for rights under the National Labor Relations Act, or risking an unfair labor practice charge.

The decision is the fulfillment of one of the goals for changing the law under the National Labor Relations Act announced by the current General Counsel of the NLRB in an August, 2021 Memorandum.