NLRB Issues Decision Prohibiting Certain Language in Severance Agreements

On February 21, 2023, the National Labor Relations Board issued its decision in McLaren Macomb (Case 07–CA–26304) which overturns the Trump era NLRB precedent set by the Baylor University Medical Center decision and its subsequent IGT d/b/a International Game Technology ruling, both of which were handed down in 2020.  The McLaren Macomb decision reverts back to pre-Trump era NLRB precedent which held that provisions in a severance agreement that have a reasonable tendency to interfere with, restrain, or coerce the exercise of employee rights under Section 7 of the NLRA are unlawful.

In McLaren Macomb, 11 nurses were terminated and given severance agreements that broadly prohibited disparagement of the hospital and required the agreement to be kept confidential. In finding the severance agreement to be unlawful, the NLRB returned to its pre-Baylor test which questioned whether the employer engaged in conduct which, “may reasonably be said, tends to interfere with the free exercise of employee rights under the Act.”  The Baylor test, by contrast, required a showing 1) that the employer unlawfully dismissed the employee under the NLRA; and 2) that employer animus towards the exercise of Section 7 rights was a relevant component of an allegation that provisions of a severance agreement violated Section 8(a)(1) of the Act.  The McLaren case found that the Baylor and IGT decisions offered no justification for the two part test, nor did the cases explain the “severely constricted view” of workers’ organizing rights.  In returning to pre-Baylor precedent, the NLRB stated that it was returning to “nearly a century of settled law” which held that workers cannot broadly waive their rights under the NLRA.

Under McLaren merely presenting a severance agreement that includes language limiting an employee’s Section 7 rights is considered unlawful by the NLRB.  It is irrelevant whether the employee accepts the agreement.  Under the Baylor two-part test, the language of a severance agreement may never be examined because the first part of the test required an unlawful termination under the NLRA.  The McLaren NLRB stated that Baylor “granted employers carte blanche to offer employees severance agreements that include unlawful provisions.  That cannot be correct under the Act, a statute designed to protect employees in the exercise of their rights.”

The relevant provisions in the McLaren severance agreement were rather generic:

“The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for  the  purposes of  obtaining legal counsel or tax advice, or  unless  legally compelled to do so by a court or administrative agency of competent jurisdiction.”

“At all times hereafter, the Employee promises and  agrees not  to  disclose in-formation, knowledge or materials of a confidential, privileged, or  proprietary nature of  which the Employee has  or  had  knowledge of,  or  involvement with, by reason of the Employee’s employment.  At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of  Employer, its  parent and  affiliated entities and their officers, directors, employees, agents and representatives.”

Many employers include such provisions in severance agreements.  By reverting to pre-Baylor precedent, merely offering a severance agreement with such terms is an unlawful act under the NLRA. In response to McLaren, employers should examine language in their severance agreements to assess whether the language can “reasonably be said” to tend to interfere with Section 7 rights.  Employers should seek labor counsel to assess whether to delete such provisions, include disclaimers regarding no intent to interfere with Section 7 rights, or stay the course to determine how the courts may enforce or ignore the NLRB’s invalidation of such language as applied outside of the exercise of Section 7 rights.  Supervisors are generally not protected by Section 7 of the NLRA.  Section 7, however, protects rank and file employees of both unionized and non-union employers.  If you need assistance drafting compliant severance agreements, contact a member of the Najjar Employment Law Group.

© February 22, 2023


The Najjar Employment Law Group, P.C. was established to provide employers with a practical approach to human resource issues. Our objective is to assist clients in meeting their business goals while minimizing employee-related conflicts. We provide clients with informed advice on not only the most recent developments in the law, but also current trends for best practices in employment and compensation matters.

Our labor and employment attorneys, working with our pension and benefits attorneys, bring together one cohesive team with diverse capabilities to assist our clients in managing and addressing complex benefits and employment law issues which arise in the workplace. Our team understands the importance of learning about each client’s business and culture.

This is a copyright publication. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission.

The article contained in this publication has been abridged from laws, court decisions, and administrative rulings and should not be construed or relied upon as legal advice. If you have questions concerning particular situations and specific legal issues, please contact your Najjar Employment Law Group, P.C. attorney. This publication can be considered advertising under applicable laws.