On February 21, 2023, the National Labor Relations Board issued a sweeping decision that will now prohibit employers from using severance agreements that essentially prevent employees that are no longer with the company from disparaging or criticizing their former employer.
The NLRB decision indicated that an employee’s severance agreement that requires them to broadly give up their rights under the National Labor Relations Act (NLRA) is unlawful. The NLRB’s decision reversed two prior decisions, both made in 2020, holding that such severance agreements were lawful.
In today’s business world, it is common for employers to require employees to sign nondisclosure and non-disparagement agreements during the hiring process, as well as in severance agreements and settlement agreements. Based on the NLRB’s decision, companies can no longer offer severance agreements that prevent employees from making disparaging remarks regarding their former employer.
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