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Did the NLRB nullify all non-disparagement clauses?

On Behalf of | Apr 20, 2023 | Business And Commercial Law |

While many can agree that fair competition is part of a healthy economy, there should be some limits on what your former employees can do in the name of competition and free enterprise.

For example, one of your employees might have a grievance against you that you believe is unwarranted. To protect your reputation, you ask them to sign a non-disparagement agreement so they cannot spread undue criticism or falsehoods about you. Now, however, businesses are limited when it comes to non-disparagement agreements.

The NLRB and non-disparagement agreements

The National Labor Relations Board (NLRB) recently issued a memo stating that employers cannot offer workers a severance agreement that requires the worker to sign a non-disparagement agreement. The NLRB said this rule applies retroactively.

But this decision does not give employees free rein to ignore non-disparagement agreements or otherwise disclose the terms of their severance agreement. In no way was the NLRB’s decision a blanket statement that all confidentiality clauses in severance agreements are annulled.

Instead, it might be possible for businesses to enforce prior non-disparagement agreements and create new ones. And workers who violate a non-disparagement agreement might still find themselves in legal hot water.

What is allowed?

The NLRB stated that a non-disparagement agreement that prohibits a worker from saying anything negative about the business or any of its employees or officers is overly broad. But workers are still prohibited from disclosing confidential information about the business or disclosing trade secrets. And workers cannot tell lies to competitors about the business they once worked for.

So, a non-disparagement clause that is specific and conservative in scope and is not overly broad can still be enforced and can still be made part of a severance agreement. Workers still have the right to report an overly broad non-disparagement clause to the NLRB to take legal action, but this does not mean that all non-disparagement clauses are now null and void.