Uncertainty Remains for Employers Using Non-Disparagement and Confidentiality Clauses

On February 21, 2023, the National Labor Relations Board (“NLRB”) issued an opinion in McLaren Macomb which found that provisions of a severance agreement – a broad non-disparagement provision and a broad confidentiality provision restricting disclosure of the terms of the agreement – violated the National Labor Relations Act (“NLRA”).  This decision greatly expounded upon the NLRB’s prior decisions.  McLaren hospital appealed this opinion to the United States Court of Appeals for the Sixth Circuit (which includes jurisdiction over the State of Michigan).  On September 19, 2024, the Sixth Circuit granted the NLRB’s petition for enforcement, denied McLaren’s petition for review, and enforced the NLRB’s “Order in full.”

As a preliminary matter, NLRB guidance and decisions are not law.  Further, courts have found that on occasion, the NLRB has overstepped its authority to enforce the NLRA.  However, employers are required to comply with NLRB decisions unless they are able to successfully combat such decisions on appeal.  Here, the Sixth Circuit did not determine whether the NLRB McLaren Macomb decision overstepped the authority granted within the NLRA.  Focusing on the facts at issue, the Sixth Circuit determined that McLaren hospital violated the NLRA regardless of whether the McLaren Macomb decision improperly interpreted the NLRA.  Otherwise put, because it determined that McLaren hospital’s actions violated the NLRA under the old precedent, the Sixth Circuit chose not to determine whether the NLRB exceeded its authority in restricting broad non-disparagement and confidentiality provisions.

Where does this leave employers?  Unfortunately, with uncertainty.  The NLRB is entitled to—and will—enforce its guidance and decisions unless and until they are overturned by a court.  Practically, this means that employers who choose not to comply with the recent NLRB guidance and decisions could incur significant expense if faced with an NLRB investigation, even if the NLRB’s guidance and decisions are later overturned.  While the Sixth Circuit did not foreclose the ability to challenge the NLRB’s prohibition on broad non-disparagement and confidentiality provisions, it refused to do so here.

Therefore, employers with questions regarding the recent NLRB guidance and decisions, non-disparagement provisions, confidentiality provisions, and/or looking for assistance in deciding how to proceed should contact Nikole Canute, Scott Dwyer, Nate Wolf, Dominic Clolinger, or Kathryn Zoller as soon as practicable.