Companies can't enforce silence for severance pay, Labor Board rules
Companies can no longer offer severance agreements that prevent employees from making disparaging remarks about their former employer, the National Labor Relations Board ruled Tuesday.
The big picture: The federal agency said these agreements require employees to waive their rights under the National Labor Relations Act, and that such policies are a violation of the act.
- According to the NLRB, "the employer’s offer is itself an attempt to deter employees from exercising their statutory rights, at a time when employees may feel they must give up their rights in order to get the benefits provided in the agreement."
- Employees also cannot be prevented from disclosing the terms of their severance packages as outlined in any exit agreement, the NLRB said.
Details: The NLRB's decision reverses two made during the Trump administration that found these types of agreements were "not unlawful."
- The NLRB said in its decision its previous rulings were wrong and did not recognize “that unlawful provisions in a severance agreement proffered to employees have a reasonable tendency to interfere with, restrain, or coerce the exercise of employee rights.”
- The previous decisions, made in cases involving Baylor University Medical Center and International Game Technology (IGT), stated that offering similar severance agreements to employees was not unlawful by itself.
- "Today’s decision, in contrast, explains that simply offering employees a severance agreement that requires them to broadly give up their rights…[and] that the employer’s offer is itself an attempt to deter employees from exercising their statutory rights, at a time when employees may feel they must give up their rights in order to get the benefits provided in the agreement," the NLRB's ruling said.
Thought bubble via Axios' Javier E. David: Taken together with the FTC’s recent move to ban noncompete agreements, as Axios Markets’ Emily Peck has recently covered, it’s clear the Biden administration is assertively reorienting workplace rules to be more supportive of workers, who have clawed back more power in the post-pandemic era.