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March 2023: Board Rules that Employers May Not Offer Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights

08 Mar

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Update Applicable to:
All employers.

What happened?
On February 21, 2023, the National Labor Relations Board issued a decision in McLaren Macomb, returning to longstanding precedent holding that employers may not offer employees severance agreements that require employees to waive their rights under the National Labor Relations Act broadly.

What are the details?
The decision reverses the previous Board’s decisions in Baylor University Medical Center and IGT d/b/a International Game Technology, issued in 2020, which abandoned prior precedent in finding that offering similar severance agreements to employees was not unlawful itself.  

The Board’s decision, in contrast, explains that simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act. The Board observed that the employer’s offer is itself an attempt to deter employees from exercising their statutory rights, when employees may feel they must give up their rights to get the benefits provided in the agreement.      

It’s long been understood by the Board and the courts that employers cannot ask individual employees to choose between benefits and exercising their rights under the National Labor Relations Act.  Today’s decision upholds this important principle and restores longstanding precedent,” said Chairman Lauren McFerran.   

Below are some hyperlinks from our trusted source, Fisher Phillips, which contain answers to essential questions employers may ask:

For more information, please see the links below:

McLaren Macomb

Article 1Article 2

What do employers need to do?
Employers should review the links above and evaluate their handbook policies regarding severance agreement provisions to ensure that they comply with the law.

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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