On March 22, 2023, National Labor Relations Board (“NLRB” or the “Board”) General Counsel Jennifer Abruzzo issued GC Memo 23-05  to all regions with guidance on the Board’s recent decision in McLaren Macomb. As we previously covered, the Board’s decision in McLaren Macomb ruled that employers violate the National Labor Relations Act (“NLRA” or the “Act”) when they offer employees severance agreements with typical confidentiality or non-disparagement provisions. As we also discussed, the McLaren Macomb case left a number of key questions unanswered. The GC Memo endeavors to answer some of those questions. Importantly, the Memo reflects advice from General Counsel Abruzzo and does not represent the Board’s precedential position — no Board decisions have been issued on the follow-up points to McLaren Macomb raised in the GC Memo. However, GC Memos indicate what cases NLRB attorneys may prosecute and may be utilized by the Board and interested parties as guidance.  

Summary of Key Clarifications

The Memo addresses approximately fourteen topics in a FAQ format, and some of the most important clarifications include:

1. Retroactive application: The Memo clarifies that the General Counsel will treat McLaren Macomb as having retroactive application. Further, the Memo notes that while an unlawful proffer of a severance agreement may be subject to the Board’s six-month statute of limitation, merely maintaining a severance agreement with unlawful provisions or attempting to enforce such an agreement outside the six-month window effectively restarts the clock.
2. Application to supervisors: The Memo acknowledges that while supervisors are generally not protected by the Act (and thus requiring confidentiality or non-disparagement provisions from supervisors would not violate the Act), the Act may protect a supervisor who is retaliated against for refusing to act on their employer’s behalf in committing an unfair labor practice.
3. Application to former employees: The Memo clarifies that former employees are entitled to the same protections of the Act because the term “employee” includes “any employee” and is not limited to the current employees of a particular employer. Further, the Memo explains that McLaren Macomb applies to former employees by noting that sharing information with former co-workers can constitute both mutual aid and protection under the NLRA.
4. Employee requests for broad non-disparagement and confidentiality clauses: The Memo states that even where an employee requests broader language, rights under the NLRA cannot be waived if it prevents the future exercise of Section 7 rights, regardless of who initially raises the issue. By extension, the Memo clarifies in a footnote that unions similarly could not lawfully waive Section 7 rights on behalf of employees. In other words, even if an employee negotiates broad confidentiality and non-disparagement provisions (as they might in a request for mutual obligations), the employer could still violate the law by agreeing to them.
5. Employer communications: The Memo implies that the reasoning in McLaren Macomb could apply to other employer communications if they are not narrowly tailored and cites examples such as pre-employment letters or offer letters.
6. Lawful non-disparagement and confidentiality clause language: The Memo recognizes that non-disparagement provisions limited to employee statements about the employer that meet the Board’s definition of “defamation” (i.e., disloyal, reckless, or maliciously untrue) may be found lawful. Further, confidentiality clauses that are narrowly tailored to “restrict the dissemination of proprietary or trade secret information for a period of time based on legitimate business justifications” may be considered lawful.
7. Disclaimer language: The Memo explains that disclaimer provisions would not necessarily cure overly broad provisions, although they could be helpful in resolving ambiguity. The Memo then reiterates the General Counsel’s suggestion from other cases that contract terms include model language stating employees are expressly allowed to engage in specific categories of activity – although this has not been adopted by the Board.
8. Other “problematic” provisions: The Memo opines that other standard provisions some employers incorporate into agreements may be problematic, including: non-compete clauses; no-solicitation clauses; no poaching clauses; liability releases and covenants not to sue that may go beyond the employer and/or may go beyond employment claims and matters as of the effective date of the agreement; and cooperation requirements involving any current or future investigation or proceeding involving the employer as that affects an employee’s right to refrain under Section 7, such as if the employee was asked to testify against co-workers that the employee assisted with filing an unfair labor practice charge.

Additional Takeaways

There are several key takeaways for employers:

1. Employers should re-examine their model severance agreements and any outstanding severance offers with labor counsel to determine how best to navigate the Board’s McLaren Macomb decision and the GC Memo.
2. Employers should consult legal counsel before disciplining supervisory employees if they refuse to give employees severance agreements that contain non-disparagement and confidentiality language on the basis that such terms are unlawful.
3. Employers should be cautious and speak with labor counsel if attempting to enforce severance agreements that include provisions similar to those in McLaren Macomb even if they were sent to former employees prior to the McLaren Macomb decision.
4. Employers should note the GC’s attempt to extend this ruling into other types of agreements and provisions and discuss those with legal counsel. Importantly, the GC Memo is not law, but it does indicate where the Board might go next.
5. To that end, employers should consider reviewing confidentiality and non-disparagement provisions in employee handbooks, policies, and other employment agreements to determine whether those may be considered too broad given the Board’s and the Memo’s forecast from this case.