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Severance Agreements

by Paige Fiedler


You might have heard that the National Labor Relations Board (NLRB) recently held that employers may not condition severance pay on workers agreeing to confidentiality and non-disparagement clauses.

  • A confidentiality clause requires the worker not to tell anyone except their spouse and tax preparer how much severance pay they received.
  • A non-disparagement clause generally requires the worker not to say anything negative about the employer for the rest of their life.

The decision was based on Section 7 of the National Labor Relations Act, which gives employees the right to unite to criticize employer policies and to discuss wages and other aspects of employment with coworkers and former coworkers.

For obvious reasons, the ruling is good for workers, who often must guess about whether an offer of severance pay is a good deal or not.  And we’re definitely against non-disparagement clauses.  They’re often written so broadly that a worker could be in violation by complaining that the cookies in the cafeteria did not have enough chocolate chips.  As a result, they’re often selectively enforced against workers who get on the employer’s bad side.

The NLRB’s new rule is limited.  It doesn’t apply to supervisors, managers, government employees, agricultural laborers and independent contractors.  But if you’re a rank-and-file employee of a private business, your rights just expanded a little.  And society often moves forward in tiny increments.  Corporations may decide it’s safer and simpler just to use the same severance agreements for everybody.

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