The Sixth Circuit Court of Appeals recently declined to comment on the National Labor Relations Board’s (the “Board”) McLaren Macomb decision which took aim at overbroad non-disparagement and non-disclosure agreements.
We first reported in February 2023, on the significant decision by the Board in McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023), which concluded, among other things, that proffering a severance agreement with broad confidentiality and non-disparagement provisions could violate Section 7 of the National Labor Relations Act (“NLRA”) – a decision and rationale we wrote about in depth here. The decision drove employers to reevaluate existing severance agreements with such provisions.
On appeal, the Sixth Circuit sidestepped the most salient aspects of the Board’s McLaren Macomb decision, namely those portions addressing the lawfulness of confidentiality and non-disparagement provisions in severance agreements, writing, “we do not address [the Board’s] decision to reverse Baylor [Univ. Med. Ctr., 369 NLRB No. 43 (2020)] and IGT[, 370 NLRB No. 50 (Nov. 4, 2020)], or whether it correctly interpreted the NLRA in doing so.” In other words, the Sixth Circuit did not offer any insight or pass judgment one way or another on the Board’s ruling that broad-based non-disparagement and confidentiality provisions are unlawful under NLRA. Indeed, while the Sixth Circuit did find the specific severance agreements at issue unlawful, it did so under previous Board precedent (not for the reasons articulated in McLaren Macomb), further reinforcing the Court’s unwillingness to address this critical issue directly.
What does this mean for employers? While there is lingering uncertainty for employers, it reinforces, at least for now, that the Board may continue to find severance agreements offered to non-supervisory employees that include broad-based confidentiality and non-disparagement provisions as unlawful. Consequently, employers should continue to review their existing severance agreements with the assistance of employment counsel to determine whether, when, and to what extent they may include appropriately crafted non-disparagement and confidentiality clauses.
