- The McLaren Macomb decision is retroactive. This means that any severance agreement entered into by an employee prior to February 21, 2023, which violates the McLaren Macomb decision, is now unlawful.
- An unlawful severance agreement is a “continuing violation” of the Act, such that the six-month statute of limitations does not prohibit an employee from bringing a claim based upon a past severance agreement entered into over six months ago.
- The decision applies to current and former non-supervisory employees, which means in-house counsel must consider whether past and current severance agreements are lawful.
- Employees cannot waive their right to lawful confidentiality and/or non-disparagement clauses.
- An employee need not execute a settlement agreement for there to be a violation; the Board will find a violation of the Act if an unlawful severance agreement is offered, which could result in equitable and economic remedies in favor of the impacted employee.
- The McLaren Macomb decision impacts any employer communication to employees that tends to interfere, restrain, or coerce an employee’s Section 7 rights (i.e., the right to engage with others regarding their working conditions or employment relationship). This means that any employer communication to employees “would be unlawful if not narrowly tailored to address a special circumstance justifying the impingement on workers’ rights.”
- The McLaren Macomb decision could impact other provisions in severance agreements including: non-compete, non-solicit, and no poaching clauses; broad liability releases and covenants not to sue that go beyond employment claims; and cooperation requirements involving investigations that affect employee’s right to refrain.
- Confidentiality clauses that restrict the dissemination of proprietary or trade secret information for a period of time based on legitimate business justifications may be lawful.
In light of this Guidance in-house counsel should:
- Review their company’s entire severance agreement to ensure that nothing therein could be interpreted as limiting an employee’s right to communicate with their co-workers, or anyone else, about workplace concerns.
- Inform upper management that they are not to instruct employees against communicating with current or former employees in any way that might interfere with their right to assist others with workplace issues.
- Consider notifying former employees who previously signed severance agreements with overly broad terms that the overbroad provisions in their severance agreements no longer apply. The Guidance suggests that doing so could form a defense to any future claim by employees alleging an unlawful severance agreement.
- Consider using a “savings clause” because, even though it may not provide absolute protection, such a clause may provide a modicum of extra help.
receive news & alerts
Yes! I’d like to receive updates with firm news and insights that are relevant to me!