This past week, Jennifer Abruzzo, general counsel for the National Labor Relations Board (NLRB)—which protects the organizing rights of private-sector workers—addressed a major decision that was recently handed down by the board. The decision, which ruled that non-disparagement clauses in severance agreements were not lawful, invited a litany of questions from employers and their attorneys. A memorandum from Abruzzo offered some clarity on the board’s ruling, stating that it would retroactively apply to agreements that had already been inked.
In the days since, a number of headlines and tweets declared that the decision voided all confidentiality clauses in severance agreements and that the move was a major coup for workers. In fact, Abruzzo’s missive—and the ensuing news coverage—has already prompted disclosures from employees who believe they are now protected by law if they violate the terms of a severance agreement. But lawyers say the NLRB’s decision isn’t as clear-cut as it might seem. “The problem is it opened the floodgates, and we don’t know what’s on the other side,” says employment discrimination attorney Vincent White. “There [are] people disclosing this week because of this. My fear is, though, that they’re disclosing based on inadequate information.”
This ruling, which was announced in February, reverses a Trump-era decision that granted employers far more leeway to effectively include gag orders as part of severance agreements—the idea being that enforcing non-disparagement clauses interferes with workers’ organizing rights, which are guaranteed under the National Labor Relations Act. But the NLRB isn’t a court, and Abruzzo isn’t an elected official, which means this decision could very well be overturned by the next administration. It could also be appealed or otherwise tested in court, such that a federal judge who isn’t sympathetic to the NLRB’s point of view may end up hearing the case.
Legal experts say a number of questions remain as to whether courts will accept the limitations set by the NLRB or find a way to reject the board’s interpretation. “This is just an opening salvo in what may be an ongoing discussion in the law,” says Brian Heller, an attorney who focuses on employment law and workplace rights. “I don’t think that you can take this ruling and make any kind of definitive conclusions because the desire to get rid of non-disparagement clauses and confidentiality has got a storied history—and so far, the forces fighting those types of contractual obligations have not fared well.”
White points to state laws offering similar protections to victims of sexual harassment in New York State and New Jersey that have not held up to legal challenges and have been swiftly “subverted by defense attorneys,” in part due to a carveout for employees who want to remain anonymous. And while Abruzzo’s memorandum was intended to more clearly articulate the scope of the NLRB decision, it’s still open to legal interpretation when it comes to which types of agreements are covered. Some lawyers argue that if this ruling aims to help preserve an employee’s right to organize, it should theoretically extend to non-disparagement clauses in all types of employment contracts, not just severance agreements. But White says an employer could easily make the legal case for the latter—or argue that an employee is lying about their mistreatment, since Abruzzo notes that a non-disparagement clause would still hold up in those cases.
“Part of the problem here is that [it] creates a gray area of litigation,” White says. “What does this all mean? So now, when you disclose, the employer can still bring litigation. And that was actually always the chilling effect. It’s not that the employer might win. That’s kind of scary—but just the employer coming after you [is] what generates hundreds of thousands of dollars in defense costs.”
As with many contentious labor issues, in the event that the NLRB’s ruling sticks, employers are also equipped with the legal and financial resources to find workarounds. “If this ruling applies only to severance agreements, what if the company says it’s not a severance agreement,” Heller says. “Or what if the company says: ‘Well, this is a settlement of a lawsuit that [took] place years after the plaintiff was terminated. Is this still deemed a severance agreement?'” Some employers may decide to narrow the scope of their agreements such that they’re enforceable, while other companies might take a chance and wait to see if an employee challenges them.
The real outcome of this decision, then, is closer to the status quo than it might have seemed at first blush. Employees who want to speak out should still consult a lawyer and carefully weigh their options—though no amount of legal advice may protect them in the event that an employer decides to take action. Still, Heller says the ruling could encourage some workers to file a complaint with the NLRB rather than pursue legal action, in the hopes that they’ll get a more sympathetic ear. At a time when worker activism and organizing efforts are growing more and more common, the impact of the NLRB’s decision may be most meaningful as a deeper interrogation of the power employers wield—and why that should preclude people from speaking truthfully about their experiences.
“I do think this is a larger discussion about the relationship between a job and a person,” Heller says. “For many years, it seemed like the job owns the person. And maybe we’re getting to a more human view, where people are viewed as individuals, not just as pawns to be controlled by a company.”
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