Earlier this year, we looked at how the Federal Trade Commission (FTC) proposed a ban on noncompete clauses in employer contracts, which restrict the jobs that former staffers can take once they leave a company. Another controversial clause that some businesses place into contracts prevents ex-employees from talking bad about their old jobs if they accept a severance agreement. Labor advocates have long criticized nondisparagement clauses for infringing on the rights of workers, a point that the National Labor Review Board (NLRB) agreed with last month.
In a landmark decision, the NLRB ruled that it is generally illegal for companies to prohibit workers from disparaging their former employer in order to receive severance. “It’s long been understood by the board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights,” said NLRB chairman Lauren McFerran. In March, the board clarified its ruling by retroactively voiding all nondisparagement clauses, meaning people who signed agreements with such provisions in the past no longer have to follow them. Anyone can now speak up about their experiences on the job if they choose, except for special cases like workers who sign classified agreements in government contracts.
The NLRB’s ruling could also have an impact on other severance clauses that prevent employees from speaking up about sexual harassment or sexual assault accusations. Legal experts claim that the board could consider those agreements illegal as well, although an official challenge would need to be filed in court first. In fact, the impact of the nondisparagement ruling could be minimal if many employees remain unaware of the change. According to labor law professor Charlotte Garden, the NLRB’s decision “would need to become part of the public consciousness” in order to meaningfully change the behavior of workers towards their former employers.
- Do you agree with the NLRB’s decision to make nondisparagement clauses illegal? Why or why not?
- Why could the NLRB’s ban on nondisparagement clauses end up having a minimal impact on workers?
Sources: Noam Scheiber, “Labor Board Curbs Gag Rules in Severance Agreements,” The New York Times, February 22, 2023; Maxwell Strachan, “Non-Disparagement Clauses Are Retroactively Voided, NLRB’s Top Cop Clarifies,” Vice, March 24, 2023.