Companies Now Required To Disclose Layoffs Regardless Of Severance Agreement

The National Labor Relations Board recently informed employers that they no longer silence laid-off employees.

The board says silencing employees violates their rights under sections 7 and 8(a)(1) of the National Labor Relations Act.

Before the announcement, employers could send out a broadly written confidentiality clause that required laid-off employees to keep silent about the terms of their severance agreement, CNN reported. However, that’s no longer the case. Companies can no longer send out non-disparagement clauses that stop their former employers from discussing the terms and conditions of their employment with third parties.

“A severance agreement is unlawful if it precludes an employee from assisting coworkers with workplace issues concerning their employer, and from communicating with others, including a union, and the Board, about his employment,” the board wrote.

Tuesday’s ruling is a reversal of what came from the Trump-era NLRB members, which stemmed from a prior case that said there were lawful restrictions on employees who received severances.

It is possible that the labor board’s ruling could be appealed. Still, for now, the ruling is effective immediately, causing employers to review and revise their severance agreements to rid of overly broad language that would restrict workers’ rights.

“Companies are definitely incentivized to silence their departing employees…[because it helps them keep] all the skeletons in the closet,” employment attorney Alex Granovsky told CNN via email.

“This decision opens the door. While on the one hand sunlight is the best medicine, and greater exposure should lead to better companies, this decision could also change the dynamics of a severance negotiation.”