Companies can no longer silence laid-off employees in exchange for severance

By Jeanne Sahadi, CNN

If your company lays you off, your employer might offer you severance pay — but only if you agree to adhere to a number of restrictions.

Staying quiet is often one of them.

But the National Labor Relations Board this week put employers on notice that they can no longer silence laid-off employees in two very specific ways that the board says violates employees’ rights under sections 7 and 8(a)(1) of the National Labor Relations Act.

Employers can no longer include a broadly written confidentiality clause that requires you to keep mum about the terms of your severance agreement. And they can no longer include a broadly written non-disparagement clause that prohibits you from discussing the terms and conditions of your employment with third parties.

“A severance agreement is unlawful if it precludes an employee from assisting coworkers with workplace issues concerning their employer, and from communicating with others, including a union, and the Board, about his employment,” the board wrote in its decision Tuesday.

The ruling is a reversal of what the Trump-era NLRB members had decided in a prior case were lawful restrictions on employees as a condition of receiving severance.

With the exception of railroads and airlines, US business employers are subject to the NLRB’s authority.

While the labor board’s ruling this week could be appealed, the ruling is effective immediately. That means employers must review — and, if necessary, revise — their severance agreements to ensure they don’t include overly broad language that would restrict workers’ rights in the two ways the board ruling indicates.

The board’s decision will give back a bit of power to employees, but how it plays out remains to be seen.

“Companies are definitely incentivized to silence their departing employees…[because it helps them keep] all the skeletons in the closet,” employment attorney Alex Granovsky told CNN via email.

“This decision opens the door. While on the one hand sunlight is the best medicine, and greater exposure should lead to better companies, this decision could also change the dynamics of a severance negotiation.”

— CNN’s Chris Isidore contribute to this report

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