Separation Agreement with Non-Assistance Clause is Neither Categorically Unlawful Nor Reviewed Under Boeing: NLRB | Practical Law

Separation Agreement with Non-Assistance Clause is Neither Categorically Unlawful Nor Reviewed Under Boeing: NLRB | Practical Law

In Baylor University Medical Center, the National Labor Relations Board (NLRB) held that a voluntary separation agreement containing a non-assistance clause is not reviewed under The Boeing Co. and is not categorically unlawful.

Separation Agreement with Non-Assistance Clause is Neither Categorically Unlawful Nor Reviewed Under Boeing: NLRB

by Practical Law Labor & Employment
Law stated as of 21 Feb 2023 • USA (National/Federal)
In Baylor University Medical Center, the National Labor Relations Board (NLRB) held that a voluntary separation agreement containing a non-assistance clause is not reviewed under The Boeing Co. and is not categorically unlawful.
On March 16, 2020, in Baylor University Medical Center, the NLRB held that an employer acted lawfully when offering individual separation agreements to departing employees in which the employees agreed to "no participation in claims," confidentiality, and non-disparagement provisions in exchange for severance pay and postemployment benefits to which they otherwise would not be entitled.
The NLRB:
  • Held the offer was lawful because:
    • it was not alleged that any employee offered the agreement was unlawfully discharged for NLRA-protected conduct; and
    • the separation agreement was offered in circumstances that did not tend to infringe on NLRA-protected activities.
    (Compare with Shamrock Foods Co., 366 N.L.R.B. No. 117, slip op. at 3 n.12 (June 22, 2018) (finding provisions of a proffered separation agreement unlawful because, among other reasons, the employee had been unlawfully discharged), enforced mem. 779 Fed. Appx. 752 (D.C. Cir. 2019); Metro Networks, Inc., 336 N.L.R.B. 63, 66-67 (2001) and Clark Distrib. Sys., Inc., 336 N.L.R.B. 747 (2001) (employer unlawfully offered employees severance agreements that included clauses prohibiting them from assisting their coworkers (non-assistance clauses) if charges concerning coworkers were filed against the employer where the employees offered agreements had been discharged unlawfully and further unlawful discharges were likely)).
  • Overruled Clark Distribution Systems to the extent it held that offering employees a severance agreement that includes a non-assistance clause is invariably unlawful.
  • Limited the holdings in Clark Distribution Systems, Shamrock Foods, and Metro Networks to fact patterns where the employees to whom the agreements were offered had been unlawfully discharged.
  • Distinguished precedent involving settlement agreements that resolve specific labor disputes, because it was not alleged here that the agreements concerned any labor dispute, or that the disputed provisions affected employees' employment terms and conditions (see, for example, S. Freedman & Sons, Inc., 364 N.L.R.B. No. 82 (Aug. 25, 2016), enforced 713 Fed. Appx. 152 (4th Cir. 2017)).
The NLRB also held that Boeing, which applies only where an employer allegedly promulgates or maintains an unlawful work rule, was inapposite because:
  • The NLRB General Counsel did not allege that the "No Participation in Claims" and "Confidentiality" provisions themselves were unlawful, only that the "issuance" or mere offer of the agreement containing these provisions to departing employees was unlawful.
  • The separation agreement was not a work rule because:
    • signing the agreement was optional and applied only in the event of separation, rather than a mandatory condition of continuing employment; and
    • the agreement pertained exclusively to postemployment activities, having no impact on employment terms and conditions or any accrued severance pay credit or benefits arising from the employment relationship that the employer would be obligated to pay regardless of whether a departing employee signed the agreement.
    (See The Boeing Co., 365 N.L.R.B. No. 154 (Dec. 14, 2017).)
(369 N.L.R.B. No. 43 (Mar. 16, 2020).)
Baylor University Medical Center provides a narrow, fact- and complaint allegation-specific safe-harbor for non-assistance provisions, which previously were categorically unlawful in separation agreements.

UPDATE:

On November 24, 2020, in IGT (d/b/a International Game Technology), a split NLRB panel extended the reasoning of Baylor University to hold that a separation agreement's non-disparagement provision was not categorically unlawful, even though it was not limited to malicious or reckless disparaging remarks, and was not to be reviewed under Boeing because it was not a work rule establishing employment conditions (370 N.L.R.B. No. 50 (Nov. 24, 2020)).

UPDATE:

On February 21, 2023, a 3-1 majority of the NLRB (Chairman McFerran and Members Wilcox and Prouty) overruled Baylor University and IGT and held that a severance agreement—and by extension an employer's proffer thereof—violates Section 8(a)(1) of the NLRA if it contains provisions that have a reasonable tendency to interfere with, restrain, or coerce employees in their exercise of Section 7 rights. Restoring prior law, the Board's analysis will focus on the severance agreement's specific language, without consideration of whether the employer engaged in independent discriminatory or unlawful conduct or otherwise harbored animus against Section 7 activity. Member Kaplan dissented. (McLaren Macomb, 372 N.L.R.B. No. 58 (Feb. 21, 2023).)