• The NLRB Challenges Employment Agreements
  • November 17, 2016
  • Law Firm: Shawe Rosenthal LLP - Baltimore Office
  • The National Labor Relations Board has challenged typical confidentiality and other provisions contained in many employment agreements, and employers (whether unionized or not) should take note of the NLRB’s concerns.

    The NLRB issued a Complaint against Bridgewater Associates, the world’s largest hedge fund firm, contending that the company “has been interfering with, restraining and coercing” employees from exercising their rights under Section 7 of the National Labor Relations Act. This section protects employees’ right to engage in concerted activity regarding the terms and conditions of employment for their mutual aid and protection. In particular, the NLRB has targeted the confidentiality provision and the non-disparagement clause.

    The NLRB’s actions are in line with the actions being taken by its sister federal agencies to enable the free flow of information from employees, whether to government agencies or to fellow employees. As we reported in our September 2016 E-Update, the Occupational Safety and Health Administration has issued policy guidelines on settlement agreements in whistleblower cases, to ensure that such agreements do not discourage employees from engaging in “protected activity,” which is defined as including “filing a complaint with a government agency, participating in an investigation, testifying in proceedings, or otherwise providing information to the government.” OSHA specifically noted that confidentiality provisions and non-disparagement clauses are particularly problematic in this regard. The Securities and Exchange Commission has similarly attacked confidentiality language in severance and other employment agreements and policies, as discussed in our August 2016 E-Update.

    In light of the NLRB’s focus on these provisions, employers should consider the following:

    - Confidentiality provisions should be narrowly tailored so that they do not prohibit employees from discussing matters such as wages, benefits, and other terms and conditions of employment.

    - Non-disparagement clauses should not broadly prohibit any “disparaging” comments, because employees are entitled to make negative comments to other employees or union representatives when engaging in protected activity.

    - Consider including a “savings clause” to the effect of “nothing in this agreement/provision is intended to interfere with an employee’s Section 7 rights.”

    Finally, it is important to work with employment counsel to ensure that these provisions are appropriately drafted.