The National Labor Relations Board’s (NLRB’s) much-discussed opinion in the McLaren Macomb case in 2023 restricted the use of non-disparagement, confidentiality, and non-competition clauses in employment agreements. This legal doctrine has now been applied to pre-existing contracts in a case involving a 2019 severance agreement. The expansion was not unexpected, as the original NLRB opinion hinted at possible application to prior agreements.
Prime Communications LP, an authorized retailer for AT&T, offered a $5,000 severance payment to a worker who resigned. The severance agreement contained non-disparagement and confidentiality clauses that the administrative law judge held to be unlawful under current NLRB interpretation.
Although the 2019 agreement predated McLaren Macomb, “its rationale clearly applies to an agreement’s maintenance — the tendency to coerce, if language-based, is the same regardless of point in time,” stated the administrative law judge.
The Prime Communications ruling on June 26, 2024, is significant, as it nullified the agreement retroactively. For employers, the implication is that employment agreements entered into before McLaren Macomb, containing similar non-disparagement and confidentiality provisions, as well as waivers of right to sue and noncompete agreements, will likely be unenforceable.
Consulting and Enterprise members with questions about how the recent decision applies to them can contact Employers Council.
Ivy N. Voss is an attorney for Employers Council.