New Rule: Severance Agreements Can No Longer Silence Laid-Off Employees

New Rule: Severance Agreements Can No Longer Silence Laid-Off Employees

 In a significant development for workers’ rights, recent changes implemented by the National Labor Relations Board (NLRB) have dramatically altered the landscape of severance agreements. For years, companies have used severance packages as leverage to impose silence on departing employees, particularly regarding the terms of their layoffs or working conditions. However, the new ruling from the NLRB changes this dynamic, enhancing the ability of employees to speak freely after separation from a company.

The NLRB’s Ruling: A Paradigm Shift for Severance Agreements

The NLRB’s decision effectively prohibits companies from including confidentiality and non-disparagement clauses in severance agreements. These clauses had become commonplace, especially during mass layoffs, as employers aimed to control the narrative surrounding workplace practices and the reasons for layoffs. Under the new rules, employees can no longer be forced into silence as a condition for receiving severance pay.

This shift follows a series of complaints raised by employees and labor advocates, who argued that such restrictions were detrimental to transparency and employee rights. The NLRB, tasked with protecting workers’ rights to engage in concerted activity under the National Labor Relations Act (NLRA), agreed that these clauses stifled employees’ rights to communicate freely about their workplace experiences, including potential issues of misconduct, discrimination, or unfair labor practices.

Impact on Employees and Employers

The new regulations offer significant benefits for employees. Workers who are laid off will now be able to:

• Speak publicly about their employment experiences.
• Discuss working conditions without fear of retaliation or losing severance benefits.
• Share insights into workplace dynamics, potentially leading to systemic improvements.

On the flip side, companies may need to rethink how they handle severance negotiations. The previous reliance on confidentiality agreements as a way to avoid reputational damage or legal scrutiny will need to evolve. Employers will have to focus on creating better work environments and addressing employee grievances proactively, rather than silencing discontent through severance terms.

Read More