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Gary Auman's Legal Report

No confidentiality clauses in severance agreements

Often, when an employer terminates an employee, the employer and employee enter into a severance agreement whereby the employer agrees to pay that employer money in exchange for the employee’s promise to release the employer from employment-related liability.

These severance agreements almost always include a confidentiality clauses.  Confidentiality clauses are important for many reasons, not the least of which is that the employer may not want that former employer to tell other employees about the money just paid to them.

However, the National Labor Relations board recently issued a decision prohibiting confidentiality clause in severance agreements.  On February 21, 2023, in McLaren Macomb, the NLRB ruled that broad confidentiality clauses interfere with the employees’ right to organize and bargain collectively [“Section 7 rights.”]  The Board held that an employer commits an unfair labor practice by including a confidentiality clause in a severance agreement, regardless of whether the employer actually seeks to enforce its rights under the contract.

Employers seeking to enter a severance agreement with an employee should check with an attorney to determine whether a confidentiality clause is necessary and whether it could be drafted in such manner that would not restrict Section 7 rights.

NLRB Increases Damage Awards to Aggrieved Employees


On December 13, 2022 the NLRB increased the penalties for unfair labor practices.  Until then, the penalty for committing an unfair labor act was reinstatement, back pay going back to the violation, and also the cost of any lost benefits.  But now, the penalty includes “all direct or foreseeable” harms.  These would be damages arising because the employee had been terminated from employment.  For example, such damages could include costs from interest and penalties on unpaid credit card bills, withdrawal penalties for 401(k) loans, or even the costs of home mortgage foreclosure might be consequential damages. 


Non-Compete Agreements


A as reported at the last meeting that in January, the Federa Trade Commission has proposed a rule banning non-compete agreements in employment contracts.  The FTC had opened a comment period until March 20.  But, due to the overwhelming number of responses, the FTC has extended the comment period from March 20 to April 19.


Instance by Instance


Starting on March 27th, OSHA began following “instance by instance” citation procedure.  This means that OSHA can assess a separate penalty for each employee exposed to a cited hazard.  For example, assume an employer did not provide fall protection for three employees working on a roof.   Under the old citation procedure, OSHA would have issued one penalty for failure to provide fall protection.  However, under the “instance by instance” method, OSHA can now assess a separate penalty for each of the three employees exposed to the hazard.  This will apply to the following areas: fall protection, trenching, machine guarding, respiratory protection, permit required confined space, lockout tagout, and some recordkeeping provisions.


Recent Heat Stress Case


The Occupational Safety and Health Review Commission recently issued a decision in a heat stress case emphasizing the importance of training supervisors to recognize and abate the hazards posed by working in the heat.  In this case, OSHA issued five general duty clause citations of the United States Post Office for failing to protect postal employees from the heat.  Although the Occupational Safety and Health Review Commission vacated four of those five citations, it affirmed one citation because the post office had not adequately trained a supervisor.  An employer’s heat illness prevention program rests on the supervisors.  Employers should work to to empower and train supervisors to protect employees from the heat.

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