- 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.,
Confidentiality and Non-Disparagement
If your company, like many, includes “standard” confidentiality and non-disparagement provisions in its employee severance agreements, those agreements may contravene a recent NLRB decision, McLaren Macomb. In that matter, the NLRB considered the validity of severance agreements offered to 11 employees who were furloughed where such severance was conditioned on them agreeing to the following, seemingly innocuous, confidentiality and non-disclosure provisions:
Confidentiality Agreement. The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse . . . professional advisors . . . or unless legally compelled to do so . . . .
Non-Disclosure. At all times hereafter, the Employee promises and agrees not to disclose information, knowledge or materials of a confidential, privileged, or proprietary nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment. At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agent and representatives.
Prior to McLaren Macomb, such provisions had … Keep reading
In Part 1 I shared with you five commonly overlooked terms in executive separation agreements. Here are five more.
6. Release Timing. If the executive is excused from performing work or coming to the office well before her last day of employment, the company may want to have the executive sign an agreement close to the day the executive is notified about her separation because the company will remain exposed to liability for the period of time between the executive’s signing the separation agreement and her actual last day. In addition, I recommend having the executive sign a second release on her actual last day of employment – and make signing that second release contingent upon receiving any post-termination severance benefits.
7. Post-Termination Restrictive Covenants and the Integration Clause. Many agreements contain a boilerplate integration provision, reciting that the agreement is the entire agreement between the parties and that the executive is not relying on anything not contained in the written document. If the executive has signed a prior agreement containing restrictive covenants which are intended to survive termination of the executive’s employment, such a general integration clause could void the prior post-termination restrictive covenants. An alternative … Keep reading
More than once, an in-house counsel has called me up wanting to sue a former employee because s/he has been “bad-mouthing” the company despite having agreed not to disparage the company as part of a settlement or severance agreement. Nevertheless, I Often have had to give the client the bad news that, in light of the actual contractual language, there would be little chance of prevailing and/or, even if we did prevail, the legal fees probably would exceed the damages we might reasonably expect to recover. The good news for those of you reading this post, however, is that there are three simple steps you can take to greatly enhance the effectiveness and enforceability of any non-disparagement clauses you would like to implement in the future. … Keep reading
In Part 1 and Part 2 I discussed four steps that I recommend employers follow in using criminal records. Here in Part 3 and the last part of this series, I address the process of the handling of the documents.
Step 5: Handling Documents with CORI
Criminal records information obtained from any source is confidential, and employers must take precautions to insure that such information is protected from disclosure. Because of the highly confidential nature of criminal records, the number of individuals who are authorized to request, access, receive and review such information must be limited, and there are strict procedures for handling, storing and destroying criminal records information. The new regulations provide for controls by:
- Requiring the designation of a CORI Representative for an employer;
- Requiring a Secondary Dissemination Log to track all distribution of CORI;
- Limiting employer registration for CORI to one year increments; and
- Limiting the validity of employee or applicant Acknowledgement Forms to 12 months from the execution date or the end of employment, whichever is sooner.
In my prior blog post, I provided the first two steps for an employer to obtain and use CORI in Massachusetts based on the new CORI regulations issued on May 25, 2012. This post addresses the next two steps in this process.
These blog posts also address when an employer conducts its own CORI checks. However, instead of conducting the background checks themselves, employers may request an outside consumer reporting agency to perform the background checks. If you use or are an outside consumer reporting agency, please note that some of the requirements of the new regulations may be different than described in my blog posts.
Step 3: Notifying Employee/Applicant of CORI
Once CORI is obtained by an employer, the employer must provide to the employee or applicant a copy of the obtained information and the source of the CORI before making any adverse employment decision based on the CORI, or even asking the employee/applicant questions regarding his/her criminal record.
If the employer intends to make an adverse employment decision based on the CORI, the employer is first required to:
- notify the individual in writing of the potential adverse employment action;
- provide a copy of the CORI, identifying