News & Events

Employers: Broad Non-disparagement and Confidentiality Clauses in Severance Agreements violate Section 7 Rights under the NRLA

On February 21, 2023, the National Labor Relations Board (“NLRB”) reversed precedent from a Trump-era 2020 Board and ruled employers covered by the National Labor Relations Act (“NLRA”), who offer Severance Agreements with broad non-disparagements and confidentiality provisions violate Section 7 and Section 8(a)(1) of the NLRA. Specifically, the NLRB ruled that an agreement that broadly prohibits employees from making statements that could disparage or harm the employer’s image and further prohibits them from disclosing the terms of said agreement to any third person may violate employees’ rights to: i) discuss the terms of the agreement or other workplace issues with others, including current or former coworkers; ii) make public statements about their workplace, including negative ones; iii) cooperate with ongoing investigations and the litigation of unfair labor practices in the workplace, among others.

Until now, employers could lawfully include broad language into their separation agreements’ confidentiality and non-disparagement clauses, in exchange for severance payments. Aside from effectively deterring employee’s from exercising their rights under the NRLA, the Board went further to hold that with these separation agreements, employees should not waive any Section 7 rights, even for consideration. The flip side of this decision may be that employees who may want to take these severance agreements may be more limited in their options to do so because of potential employer resistance to offer them.

What does this mean for employers in Puerto Rico?

Even though this decision was issued in the context of employees covered by a collective bargaining agreement, the decision applies to all employers regardless of union status covered under the NLRA. The exception to this ruling is to agreements related to managers, supervisors, or independent contractors.

Employers should be mindful of this ruling when drafting and executing severance agreements as well as other legal considerations which may pose risks for employees’ rights before government agencies under federal and local law. The use of carved-out language for non-waivable rights in their confidentiality and non-disparagement clauses, and other language to address specific operational needs and business targets may avoid potential violations.

This document has been prepared for information purposes only and is not intended, and should not be relied upon, as legal advice. If you have any questions or wish to obtain more information related thereto, or about its possible effect(s) on policy or operational matters, please contact us at your convenience.

Katherine González-Valentín

René J. Avilés-García

María J. (Nani) Marchand-Sánchez

Gregory Figueroa-Rosario

    Patricia M. Marvez-Valiente

Gisela E. Sánchez-Alemán

Nicole G. Rodríguez-Velázquez

Luis M. Cotto Cruz