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NLRB Poised to Revisit “Confidential” Severance Agreements and Leap Into the National #MeToo Discussion

By Jay M. Dade

As 2017 drew to a close, two key members of the National Labor Relations Board (“NLRB” or “Board”) signaled their readiness to revisit the Board’s current stance regarding the confidentiality of severance agreements. All employers should take notice.

In a footnote to the Board’s December 27, 2017 order denying summary judgment in Baylor University Medical Center, 10-CA-195335, Members Marvin E. Kaplan and William J. Emanuel, both appointed by President Trump, not only expressed their concurrence with the order but further noted their belief “to the extent not already permitted under Board precedent, the legality of confidential severance agreements for former employees should be reconsidered.”  Days before the issuance of the Baylor University Medical Center order, President Trump named Member Kaplan the Board’s Acting Chair.

Confidentiality provisions of agreements resolving alleged workplace sexual harassment allegations came under increasing fire in 2017 as reports circulated regarding Hollywood icons as well as high profile news anchors, commentators and executives, and the #MeToo national awareness campaign gained steam across professions and industries.

Recent Decisions by the Obama-Era Board have indicated strong disfavor of “confidentiality” obligations imbedded in such instruments as “non-disclosure” and “non-disparagement” agreements, otherwise known as NDAs. Previously, the Board has barred such contractual obligations upon finding they overreach and infringe on certain rights of employees (unionized and non-unionized alike) to engage in “concerted activities” protected under the National Labor Relations Act (in other words, acting collectively to protect not only themselves but coworkers). Specifically, the Board has invalidated such provisions by finding they tend to chill employees’ Section 7 rights under the Act to discuss terms and conditions of their employment. Indeed, only rarely would the Board in the Obama Era uphold such provisions absent determining them to be very narrowly tailored.

The December 27 footnote to what would have been an otherwise obscure Board Order by Members Kaplan and Emanuel caught the attention of employers throughout the country. These comments by the Board’s newest Members (including now the Acting Chair) portend another shift of the Trump Board away from the prior Obama Board, clearly signaling the Board may become more tolerant of employer-imposed confidentiality restrictions in not only severance agreements (as noted by Members Kaplan and Emanuel) but also NDAs. Such a shift would be similar to that recently announced on December 14, 2017 whereby the Board took a more lax position evaluating employer personnel policies, one that will generally be more favorable to employers seeking to enforce workplace rules.