Businesses cant enforce silence on severance pay Labor Authority rules

Businesses can’t enforce silence on severance pay, Labor Authority rules

Companies can no longer offer severance agreements that prevent workers from making derogatory remarks about their former employer, the National Labor Relations Board ruled on Tuesday.

The big picture: The federal agency said these agreements require workers to waive their rights under the National Labor Relations Act and that such policies violate the law.

  • According to the NLRB, “The employer’s offer is itself an attempt to prevent workers from exercising their statutory rights at a time when workers may feel they have to forego their rights to those provided for in the agreement to receive benefits.”
  • Employees also cannot be prevented from disclosing the terms of their severance pay, as set out in a termination agreement, the NLRB said.

Details: The NLRB’s decision reverses two decisions made during the Trump administration that found these types of agreements were “not unlawful.”

  • The NLRB said in its ruling that its previous judgments were erroneous, failing to recognize “that unlawful provisions in a severance agreement offered to employees have a reasonable tendency to interfere with, restrict, or coerce the exercise of workers’ rights.”
  • Previous rulings, made in cases involving Baylor University Medical Center and International Game Technology (IGT), held that offering similar employee termination agreements was not in itself illegal.
  • “Today’s decision, on the other hand, explains that merely offering a termination agreement requiring them to largely waive their rights is…[and] that the employer’s offer is itself an attempt to discourage workers from exercising their statutory rights at a time when workers may feel they must forego their rights in order to obtain the benefits provided for in the agreement” , according to the NLRB decision.

thought bubble About Axios’ Javier E. David: Coupled with the FTC’s recent move to ban non-competition clauses, as Axios Markets’ Emily Peck recently reported, it’s clear that the Biden administration is aggressively rebalancing workplace rules to protect claw-edging workers , to support stronger back to more power in the post-pandemic era.

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