In a recent decision, the National Labor Relations Board (“Board”) ruled that overly broad confidentiality and non-disparagement clauses in severance agreements are unlawful. In fact, even the mere offering of a severance agreement with these clauses is unlawful. Employers typically include these clauses in severance agreements either to restrict an employee from discussing the severance terms with coworkers or to restrict the employee from publishing false or defamatory comments about the employer following the employee’s departure from the company. The Board reasoned that these two clauses, if drafted too broadly, might cast too wide a net and have a “chilling effect” on an employee’s exercise of their protected rights under the National Labor Relations Act (“Act”). This ruling applies to severance agreements offered in union and non-union private-sector workplaces.
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