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The National Labor Relations Board witnessed a significant increase in union election petitions in fiscal year (FY) 2024 (Oct. 1, 2023 – Sept. 30, 2024). The Board received 3,286 union election petitions, a 27 percent rise from 2,593 petitions received in the previous fiscal year. This surge is more than double the 1,638 petitions received in FY 2021, according to a Board press release.

Unfair labor practice charge filings also increased 7 percent from FY 2023, making the Board’s total case intake in FY 2024 the highest in over a decade.

The dramatic increase in union election petitions comes a year after the Board established a new framework for when an employer needs to file an “RM petition” after receiving a demand for union recognition. As a result of that decision, RM petitions filed by employers skyrocketed this fiscal year, accounting for more than 450 petitions filed.

The Board noted the uptick in activity has resulted in increased workload for the agency. Nonetheless, it processed more cases this year than last year during the same period despite shrinking staffing levels and funding shortages.

Employers need to stay informed about these organizing trends and work to address the underlying employee issues driving the increase in union election petitions. Employers must continue engaging in positive employee relations, address employee issues and concerns head on, and prepare to communicate with employees about union organizing.

Governor Newsom has officially signed Senate Bill (SB) 399 into law, which enacts the California Worker Freedom from Employer Intimidation Act (Act) to take effect January 1, 2025. California employers have been monitoring its passage because of its potential impact on an employer’s ability to lawfully communicate its position and educate employees regarding a labor organization.

Read the full article on Jackson Lewis’ California Workplace Law Blog.

A federal judge for the U.S. Eastern District of Texas vacated the National Labor Relations Board’s new joint-employer rule, finding the rule too expansive. U.S. Chamber of Commerce et al. v. NLRB et al., No. 6:23-cv-00553 (Mar. 8, 2024).

The rule, which was set to take effect March 11, 2024, following two previous delays, sought to expand the forms of control that determine joint-employer status, making it easier for employment relationships to fall under the joint-employer umbrella.

The judge issued his order following oral arguments between the Board and a coalition of business groups led by the U.S. Chamber of Commerce. The business groups argued the rule is unlawfully overbroad and would negatively affect franchisors, contractors, and staffing agencies. Indeed, the rule aimed to broaden the Board’s most recent 2020 standard issued under the Trump Administration by finding joint-employer status where an entity possessed the authority to control at least one of seven enumerated essential terms and conditions of employment, regardless of whether that control was actually exercised.

The judge vacated the new rule, finding the Board’s reach “exceeds the bounds of the common law and is thus contrary to law.” The judge also held the Board’s rescission of the 2020 rule arbitrary and capricious and reinstated the 2020 rule that requires “direct and immediate control” over the essential terms and conditions of employment of another entity to establish joint-employer status.

The recent tug-of-war on this important issue has been almost continuous, going back to the Obama NLRB’s ruling in the seminal Browning-Ferris case in 2015, which first sought to expand the direct-and-immediate-control-test (which had been the NLRB rule for decades but was later partly struck down).

While it remains uncertain whether the Board will appeal this judge’s ruling, pending litigation over the rule is also ongoing in the U.S. Court of Appeals for the D.C. Circuit. The Service Employees International Union filed a petition for review in that jurisdiction, aiming to broaden the rule even further. The competing legal challenges may ultimately need to be resolved by the U.S. Supreme Court.

Please contact a Jackson Lewis attorney with questions on the ruling and how it may impact your organization.

The union membership rate among private sector workers remained steady at 6% in 2023, according to a U.S. Bureau of Labor Statistics (BLS) news release. As the 2022 rate indicated, private sector union membership continues to decline since the peak in the 1950s.

Organizing activity continued to increase in 2023, with unfair labor practice charges and representation petitions reaching the highest levels in years, according to a fiscal year (FY) 2023 National Labor Relations Board press release. Unions also won 76% of representation elections, an increase from 72% from FY 2022.

However, while the number of private sector union workers increased by 191,000 in 2023, the size of the national workforce also grew, and unions did not grow membership enough to increase the national membership percentage rate.

Union membership increased in many states, including Alabama, Arkansas, Florida, Georgia, Indiana, Kentucky, Mississippi, Nebraska, Oklahoma, and South Carolina.

Industries with some of the highest membership rates include transportation and utilities (16.5%), construction (10.7%), motion pictures and sound recording (12.1%), and education and health services (8.1%).

Moreover, industries with traditionally low union membership have seen an uptick in organizing as well. For example, in recent years the accommodation and food services industry has seen a significant increase in organizing activity, particularly at quick-serve restaurants and other national chains across the country.

The year 2023 also saw workers in the financial services industry vote on union representation, despite the industry’s low membership and representation rate of 1.7%. Although only 34 petitions for election in the financial services industry have been filed in the last five years, 35% of those were filed in 2023 alone. This data indicates that organizing efforts in the financial services industry will likely continue to increase.

The BLS data emphasizes that, although the overall membership rate remained steady, organizing momentum should not be discounted. Indeed, more than 300 strikes occurred across the country in 2023 and unions reached several high-profile landmark agreements, which will likely spur organizing efforts among the workforce in the year ahead.

Organizing momentum, combined with the pro-labor Biden Administration, means it is critical for employers to be prepared, even those in industries with lower union membership. Employers must engage in positive employee relations, address employee issues and concerns head on, and prepare to communicate with employees about union organizing.

Please contact a Jackson Lewis attorney with questions.

The National Labor Relations Board has announced that the effective date of its new “joint employer” final rule is postponed by two months. The announcement coincides with several legal challenges to the rule, previously scheduled to become effective on Dec. 26, 2023. The extended effective date is Feb. 26, 2024.

The final rule has significant implications for employers. Among other things, it would broaden the joint-employer standard to include anyone controlling just one of seven “essential terms and conditions of employment.”

According to the Board’s website, the Board extended the date in order to “facilitate resolution of legal challenges with respect to the rule.” Indeed, there have been several challenges to the final rule since it was announced. For example, on Nov. 9, the U.S. Chamber of Commerce and a coalition of business groups filed a lawsuit challenging the rule as statutorily unauthorized, arbitrary, and capricious. The final rule has also encountered political challenges, with lawmakers introducing a resolution in the Senate to overturn the rule.

Given the number of challenges to the final rule and their complexity, it remains uncertain whether the effective date will be extended again beyond February 2024. Prudent employers, however, should assume the rule will go into effect in February and prepare accordingly by carefully reviewing any commercial agreements with other companies to determine whether a joint-employer relationship may be established.

Please contact a Jackson Lewis attorney with questions on the Final Rule and how it may impact your organization.

Training repayment agreements (TRA) are a tool for retaining employees after they received employer-paid training. Generally, a TRA requires an employee to repay an employer for the costs of training if the employee leaves employment before a set period of time. Several federal agencies are scrutinizing their legality.

For example, on September 1, 2023, Region 9 of the National Labor Relations Board (NLRB) issued a Consolidated Complaint against an employer alleging, among other things, that the employer violated Section 7 of the National Labor Relations Act (NLRA), when it required two employees to repay training costs incurred during employment pursuant to the terms of an employment agreement. As alleged in the Consolidated Complaint, the employees signed employment agreements at the start of their employment that identified the employer’s initial training program costs and the yearly continuing education training costs. The agreement stated that if the employee left within the first 12 months of employment, the employee would owe the full costs of the training and a prorated amount if the employee left within the first 13 to 24 months of employment. In the Consolidated Complaint, the Region 9 regional director alleged the employer sought repayments from each employee for $50,000 and $60,000, respectively. The Consolidated Complaint also alleged other provisions of the agreement were unlawful, including confidentiality, non-disparagement, and non-competes provisions.

In a related NLRB press release, the Region 9 regional director explained that such provisions interfere with employees’ rights under Section 7 of the NLRA because they “in practice cut off employees’ ability to leave their job”. In support of this position, the Region 9 regional director referenced a May 30, 2023 memorandum from the NLRB General Counsel Jennifer A. Abruzzo to all regional directors. In that memorandum, General Counsel Abruzzo set forth her view that, except in limited circumstances, non-compete agreements violate the NLRA. Relevant to the discussion of TRAs, she wrote, “[I]n my opinion, business interests in retaining employees or protecting special investments in training employees are unlikely to ever justify an overbroad non-compete provision because U.S. law generally protects employee mobility, and employers may protect training investments by less restrictive means, for example, by offering a longevity bonus.” While the memorandum and the allegations in the Consolidated Complaint do not represent current Board law, the Board has issued numerous decisions in the last year adopting General Counsel Abruzzo’s positions.

Further, the Federal Trade Commission (FTC) has proposed a new rule that, if made final, would prohibit some TRAs. The FTC’s proposed rule targets traditional non-compete clauses, as well as “de facto non-compete clauses” that have the “effect” of prohibiting workers from seeking or accepting employment after the conclusion of the worker’s current employment. The FTC has cited TRAs as one of two examples of what may be considered a “de facto non-compete clause”:

A contractual term between an employer and a worker that requires the worker to pay the employer or a third-party entity for training costs if the worker’s employment terminates within a specified time period, where the required payment is not reasonably related to the costs the employer incurred for training the worker.

According to the FTC, non-compete clauses — including some TRAs — lower wages for both workers who are subject to them and workers who are not, because they prevent workers from leaving jobs and decrease competition for workers. If the proposed rule is made final, it would supersede all contrary state laws and subject TRAs to challenge.

Finally, the Consumer Financial Protection Bureau (CFPB) — the agency that implements and enforces federal consumer financial laws — issued a report on July 20, 2023, regarding consumer risks posed by “employer-driven debt,” which it defined to include TRAs. The report concluded that the use of TRAs “may pose substantial risks to consumers, particularly when employers use unequal bargaining power to require workers to become indebted to the employer or an affiliate as a condition of employment.”

In addition to this increasing federal scrutiny, some states have passed legislation prohibiting TRAs or are considering similar legislation. In light of the growing potential for legal challenges, employers should continue to assess the viability of TRAs, including the terms and conditions under which employees enter into such agreements.

Please contact a Jackson Lewis attorney with any questions.

In the weeks surrounding Labor Day 2023, the National Labor Relations Board overturned precedent with decisions and rules significantly impacting both union and non-union employers. The result is labor laws encouraging both unionization and concerted employee actions affecting working conditions. Employers must review and assimilate these decisions before implementing new protocols and strategies in response. Here of some of the most critical so far in 2023.

New Election Rules

The Board announced a Final Rule, 88 Fed. Reg. 58076, amending and returning its representation election procedures to a slightly modified version of the “quickie election” rules establishing tight timelines on hearing dates and elections and drastically reducing the time given to employers for responding to a representation election petition. Barring subsequent agency action or judicial intervention, the Final Rule becomes effective December 26, 2023. The amended rules underscore the importance of a proactive approach to the threat of union organizing.

Mandated Union Recognition

The Board imposed a new framework governing the process through which unions attain the status of collective bargaining representative of a unit of an employer’s employees. 372 NLRB No. 130 (2023). If a union demands recognition based on its claimed support from a majority of employees, an employer that refuses to recognize the union would violate the National Labor Relations Act unless the employer “promptly” files an RM petition with the Board requesting an election to test the union’s claim of majority status or the appropriateness of the unit sought. Further, if the employer commits virtually any unfair labor practices (ULPs), the Board will dismiss the petition without an election and order the employer to recognize and bargain with the union.

Duty to Bargain During Contract Negotiations

In Tecnocap LLC, 372 NLRB No. 136 (2023); and Wendt Corporation, 372 NLRB No. 135 (2023), the Board expanded employers’ duty to bargain during first contract negotiations and following the expiration of collective bargaining agreements. The decisions restrict an employer’s ability to use past practice as a defense to a ULP charge over such unilateral changes, unless they are consistent with a long-standing practice and do not require the exercise of significant discretion. Further, employers can no longer rely on past practice for implementing unilateral changes authorized under an expired management-rights clause. These decisions greatly restrict an employer’s ability to unilaterally implement most changes in terms and conditions of employment during initial bargaining or a contract hiatus.

Protected Concerted Activity

The Board has expanded protections for employee advocacy in the workplace. American Federation for Children, 372 NLRB No. 137 (2023); Miller Plastic Products, Inc., 372 NLRB No. 134 (2023). In Miller, the Board returned to the “totality of the circumstances” test for determining when individual employee action constitutes protected concerted activity. Employee activity will be assessed using a holistic, fact-based approach to determine whether individual complaints or protests have a link to group action. In American Federation, the Board revived prior precedent by holding the Act protects statutory employees advocating on behalf of non-employees, such as interns or contractors. The Board applied an attenuated definition of “mutual aid and protection” to conclude that, by seeking to induce group support for non-employees, the statutory employees were affecting their own terms and conditions of employment, thereby making the activity both “concerted” and protected under the Act.

Work Rules and Handbook Policies

The Board revised its standard for assessing whether an employer’s work rules unlawfully restrict protected employee activity under the Act. Stericycle, Inc.,372 NLRB No. 113 (2023). Work rules will be presumptively unlawful if they have a “reasonable tendency” to chill employees from exercising their organizing rights or otherwise have a coercive meaning. The burden will be on the employer to prove that its “legitimate and substantial business interests cannot be accomplished with a more narrowly tailored rule.” The decision impacts most employers but more so in a union organizing context, because any employer rule deemed unlawful by the Board can result in an order forcing the employer to bargain with the union without an election.

Independent Contractor Standard

The Board returned to an employee-friendly test for determining whether an individual is an independent contractor. The Atlanta Opera, Inc., 372 NLRB No. 95 (2023). The Board’s decision lowers the threshold for finding employee status and, thus, whether workers are afforded protections under the Act, including the right to unionize and collectively bargain. The Board again will assess all aspects of the working relationship, with no single factor being determinative. The entrepreneurial opportunity factor will depend on whether the individual is rendering services as part of an independent business or performing functions that are essential to the employer’s normal business operations. Any weight given to entrepreneurial opportunity also must be actual (not theoretical) and must take employer restrictions into consideration.

Employee Discipline

The Board reverted to its pre-2020 “setting-specific” standard for determining whether an employer lawfully disciplines an employee for otherwise protected concerted activity that crosses the line into unprotected abusive (“opprobrious”) conduct. Lion Elastomers LLC II, 372 NLRB No. 83 (2023). Rather than focus on the employer’s motivation, the Board will consider the following factors to gauge the lawfulness of the discipline:

1. The locus of the activity;

2. The subject-matter of the otherwise protected conduct;

3. The nature of the employee’s outburst; and

4. Whether the outburst was somehow provoked by the employer’s ULPs.

This decision grants greater latitude to employees who are overzealous or even abusive in exercising what would otherwise be activity protected by the Act.

Remedies for Repeat Violators

The Board outlined expansive remedies for repeat violators of the Act. Noah’s Ark Processors, LLC d/b/a WR Reserve, 372 NLRB No. 80 (Apr. 20, 2023). The Board’s decision posits a listing of potential remedies it will consider if it determines that an employer has engaged in what it concludes are serious ULPs. The list of extraordinary remedies includes forcing an employer to post in its facility a more comprehensive explanation of employees’ rights, requiring a supervisor or other official to read verbatim a notice containing a detailed accounting of employee rights under the Act, mailing the same notice to employees’ homes, and reimbursing the union’s bargaining expenses and bargaining committee employees’ lost wages.

Severance Agreements

The Board reinstated its standard for restricting employee severance agreements. McLaren Macomb, 372 NLRB No. 58 (2023). The ruling applies to all severance agreements for employees covered by the Act and restricts certain confidentiality and non-disparagement clauses, as well as releases of claims under the Act. The decision emphasized the importance of employees’ rights to make public statements about the workplace and opined that severance agreements restricting such statements would chill employees’ rights to participate in Board investigations or filing ULP charges. 

Other Potential Changes

Other anticipated actions by the Board in the coming months:

  • Banning mandatory meetings with employees on working time to educate them about the negative aspects of unionization (“captive audience” meetings);
  • Expanding employees’ right to use company email and other electronic communication platforms in the workplace for non-business purposes, including union activity;
  • Prohibiting overbroad non-compete agreements in employment or severance agreements;
  • Expanding union’s right to access employer’s property; and
  • Requiring a stricter standard for employing permanent strike replacements.

In addition, the Board is expected to issue a new rule for determining joint-employer status under the Act. The Board’s proposed rule, issued September 2022, provides that entities may again be deemed joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment.” These terms and conditions include wages, benefits and other compensation, work assignments and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules. Under the proposal, even reserved control or the power to exert indirect control could be sufficient to establish joint-employer status. The joint-employer standard has been one of the most contentious labor issues in the past decade, and the rule as proposed would have a significant impact on many employers, particularly those who utilize temporary labor services.

Jackson Lewis attorneys are monitoring all Board decisions and general counsel initiatives. If you have any questions about these topics, potential risks before the Board, or your workplace rules and policies, please contact a Jackson Lewis attorney.

NLRB General Counsel Jennifer Abruzzo is pressing for stricter enforcement against the use of workplace technologies to monitor employees.  As a result, employers should consider the National Labor Relations Act (the “Act”) when conducting forensic reviews of employee emails and texts during internal investigations. 

On October 31, 2022, Abruzzo issued Memorandum GC 23-02 titled “Electronic Monitoring and Algorithmic Management of Employees Interfering with the Exercise of Section 7 Rights.”  This memo urges the NLRB to find that employers presumptively violate the Act if their electronic monitoring and automated management practices interfere with or prevent covered employees from engaging in protected concerted activity. 

Abruzzo suggests a new legal framework for determining the lawfulness of electronically monitoring employees.  Her memo proposes that if the employer establishes that their surveillance practices are “narrowly tailored” to address a legitimate business need (i.e., that its need cannot be met through means less damaging to employee rights), the Board should balance the respective interests of the employer and the employees to determine whether the Act permits the employer’s practices.  Even if the employer’s business need outweighs the employee’s rights, Abruzzo suggests that an employer should be required to disclose to employees the technologies it uses to monitor and manage them, its reasons for doing so, and how it is using the information it obtains.

When conducting internal investigations, employers should be cognizant of the NLRB General Counsel’s new focus relating to electronic monitoring.  A forensic review of employee emails and texts should be carefully tailored to the situation to make it more likely to be acceptable under any new standard the NLRB may set based on Abruzzo’s initiative.  Employers should consider whether their existing policies are appropriately tailored and sufficiently address the review of e-mails/texts during an internal investigation.

Employers should be aware of other examples Abruzzo identifies relating to how the increased use of new technologies for monitoring employees might violate the Act, including: (1) using wearable devices, security cameras, and radio frequency identification badges to track conversations and movements; (2) inserting GPS tracking devices and cameras in vehicles used by employee drivers; and (3) utilizing computers to monitor employees in call centers, offices, or at home through keyloggers and software that takes screenshots, webcam photos, or audio recordings throughout the day.

Her memo also considers when surveillance extends to break times and nonwork areas – which could be viewed as preventing employees from engaging in solicitation or distribution of union literature during nonworking time.  Just recently, in Stern Produce Company, 372 NLRB No. 74 (Apr. 11, 2023), the Board considered a situation where a known union-supporting employee was told by his supervisor not to cover the inside-facing camera in his truck during a lunch break.  The Board found that the employer violated the Act because the supervisor’s actions created an impression of surveillance which departed from the Employer’s past practice as the employee was never told not to cover the camera during his lunch break and was not aware of a policy prohibiting employees from doing so.

In sum, employers should keep their eye on the possible NLRB impact on internal investigations. Considering Abruzzo’s memo, employers should evaluate their electronic monitoring policies, and review NLRB updates on enforcement against such practices as well as their internal investigation strategies for legal compliance on an ongoing basis.

The Jackson Lewis Corporate Governance and Internal Investigations practice group is well-versed in workplace surveillance issues and continues to analyze ongoing developments in the area.  Please contact a Jackson Lewis attorney with any questions regarding workplace surveillance and any other corporate governance and internal investigations developments.

On March 22, 2023, National Labor Relations Board (NLRB or Board) General Counsel Jennifer A. Abruzzo issued a memorandum to all NLRB Field Offices on the implications of the Board’s February 21, 2023, decision in McLaren Macomb, 372 NLRB No. 58 (2023). 

In McLaren Macomb, the Board found an employer violated the National Labor Relations Act (NLRA) by offering severance agreements to furloughed employees containing overbroad non-disparagement and confidentiality provisions, which interfered with employee rights under Section 7 of the NLRA. Among others, Section 7 grants employees the right to engage in “concerted activities for the purpose of … mutual aid or protection ….” the Board ruled the non-disparagement provision infringed on employee rights under Section 7 to criticize the employer’s workplace policies. The Board also ruled the confidentiality provision interfered with Section 7 rights because it prevented employees from discussing the severance agreement (including its unlawful non-disparagement provision) with others, including the NLRB, coworkers, and the employee’s current or future union. 

The Board’s decision created some confusion over the enforceability and lawfulness of severance agreements and other employment-related agreements.

General Counsel Abruzzo then issued the memorandum to assist the NLRB Field Offices in their responses to inquiries from the public on the implications of McLaren Macomb. Albeit not legally binding or reflecting the views of the Board, the memorandum provides insight into how General Counsel Abruzzo and the NLRB Field Offices may interpret common provisions in severance agreements and other agreements in the wake of McLaren Macomb. The memorandum addressed the following:

  1. Severance agreements are not per se unlawful under the NLRA. Citing prior Board decisions, General Counsel Abruzzo confirmed that employers may continue to lawfully offer severance agreements containing a release of employment claims to employees without violating the NLRA, provided they do not contain overly broad provisions interfering with Section 7 rights.
  2. Surrounding circumstances are not relevant when analyzing whether a provision is lawful. According to General Counsel Abruzzo, an employer cannot have a legitimate interest in maintaining a facially unlawful provision in a severance agreement. Thus, the circumstances surrounding a specific provision are not relevant. 
  3. The mere offering of a severance agreement with an unlawful provision violates the NLRA, even if an employee does not actually sign the severance agreement. General Counsel Abruzzo interprets the mere offering of a severance agreement with an overly broad provision to be inherently coercive and violative of the NLRA, because it conditions severance benefits on the waiver of statutory rights to engage in future protected concerted activities or to file or assist in the investigation and prosecution of charges with the Board. 
  4. Offering a severance agreement to a supervisor could be unlawful. General Counsel Abruzzo opined that even though supervisors are not generally protected by the NLRA, it would be unlawful for an employer to retaliate against a supervisor who refuses to proffer an unlawfully overbroad severance agreement, and it could be unlawful to offer a severance agreement to a supervisor if it would prohibit a supervisor from participating in a Board proceeding.
  5. McLaren Macomb applies retroactively to severance agreements executed before the decision. General Counsel Abruzzo explained that, because all Board decisions are presumed to apply retroactively, the holding of McLaren Macomb applies to severance agreements entered into before February 21, 2023 (i.e., the date of the decision). While acknowledging that the six-month statute of limitations under Section 10(b) of the NLRA may apply to an unlawful proffer of a severance agreement with overbroad provisions, General Counsel Abruzzo opined that “maintaining and/or enforcing” a previously entered into severance agreement with unlawful provisions would continue to be a violation and a charge alleging such a violation would not be time-barred. 
  6. In general, the entire severance agreement will not be invalidated by a single overbroad provision, just the offending provision. Recognizing that each case is fact specific, General Counsel Abruzzo indicated the NLRB generally will seek to have the specific unlawful provisions voided instead of voiding the entire agreement, “regardless of whether there is a severability clause or not.” General Counsel Abruzzo encouraged employers to proactively advise former employees subject to severance agreements with unlawful provisions that such provisions are null and void and the employer will not seek to enforce the provisions or pursue penalties for breach of the unlawful provisions. General Counsel Abruzzo acknowledged that such conduct would not cure a technical violation, but she said it “could form the basis for consideration of a merit dismissal if a meritorious charge solely alleging an unlawful proffer is filed.” Employers considering such an approach should consult with counsel.
  7. Former employees are entitled to the same protections as current employees. General Counsel Abruzzo asserts that former employees are entitled to the same protections as current employees under the NLRA, noting that the statutory definition of “employee” is not limited to employees of a particular employer, discussions protected under Section 7 are not limited to discussions with coworkers, and former employee involvement in NLRB proceedings constitutes mutual aid and protection under Section 7.
  8. Neither employees nor their unions can voluntarily waive the future exercise of Section 7 rights. Citing public policy considerations, General Counsel Abruzzo opined that, regardless of whether the employer, the employees, or a union on behalf of employees requests an overbroad confidentiality or non-disparagement provision, employees cannot waive the future exercise of their Section 7 rights.
  9. Prior guidance regarding the terms of “non-Board” settlement agreements are consistent with McLaren Macomb. The memorandum confirmed the guidance regarding non-Board settlements (i.e., settlements between the parties that result in a withdrawal of an unfair labor practice charge) in a 2006 memorandum issued by the NLRB’s Office of the General Counsel, OM 07-27, is consistent with the Board’s decision in McLaren Macomb. OM 07-27 outlined concerns about various provisions in non-Board settlements, including: waivers of the right to file NLRB charges on future unfair labor practices and on future employment; waivers of the right to assist other employees in the investigation and trial of NLRB cases; narrowly tailored confidentiality clauses and clauses that prohibit an employee from engaging in non-defamatory talk about the employer; and unduly harsh penalties for breach of the agreement.
    OM 07-27 acknowledged that, despite a general rule against provisions limiting an individual from engaging in discussions about the employer or the terms of the settlement agreement, non-Board settlements could contain provisions prohibiting defamatory statements and the disclosure of the amount of money received under the settlement agreement. OM 07-27 also acknowledged that, while employees may not release future rights, in certain circumstances, “an employee may knowingly waive the right to seek employment with a named employer in the future.” 
  10. Narrowly tailored confidentiality and non-disparagement provisions may be lawful. General Counsel Abruzzo opined that confidentiality provisions restricting the dissemination of proprietary or trade secret information for a period of time based on legitimate business justifications could be lawful, but she did not provide an example of lawful language. Similarly, she opined that a non-disparagement provision may be lawful if it is limited to statements that “meet the definition of defamation as being maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity.”
  11. A “savings clause” or disclaimer may resolve ambiguous terms, but it would not necessarily cure overbroad provisions. General Counsel Abruzzo also confirmed her opinion that even if a severance agreement contained a NLRA disclaimer or other statement outlining employee rights under Section 7, it would not necessarily cure an overbroad provision and an employer may still be liable for mixed or inconsistent messages provided to employees.
  12. Beyond non-disparagement and confidentiality provisions; other common provisions may be unlawful. Finally, General Counsel Abruzzo identified several other types of common provisions that she views as problematic and potentially interfering with Section 7 rights, including: non-competes, no solicitation, no poaching, cooperation requirements for current or future proceedings, and broad liability releases and covenants not to sue that go beyond the employer, employment claims, or matters as of the date of the agreement. 

General Counsel Abruzzo’s memorandum suggests the NLRB Field Offices will carefully review severance agreements and other employment agreements to assess whether each provision interferes with employee rights under Section 7. Employers should consult with experienced labor counsel to thoroughly assess severance agreements and other employment agreements in light of Section 7, the McLaren Macomb decision, and the General Counsel’s memorandum.

On March 7, 2023, the Consumer Financial Protection Bureau (CFPB), the federal government agency charged with protecting consumers in the financial sector, and the National Labor Relations Board (NLRB), the federal government agency tasked with protecting private sector employees’ rights to engage in union organizing and other concerted activity, announced an information sharing agreement in order to better protect both consumers and workers.

Read the full article on Jackson Lewis’ Workplace Privacy, Data Management & Security Report.