In its Quicken Loans, Inc. decision (attached), the NRLB held that a non-disparagement clause in Quicken Loans’ Mortgage Banker Employment Practice Agreement constituted an unfair labor practice per the National Labor Relations Act (NLRA), because it would substantially hinder employees’ exercise of rights under Section 7 of the NLRA. Section 7 gives employees to engage in “concerted activity,” i.e. the right to act together to try to improve pay and/or working terms and conditions – even if they aren’t in a union. Section 7 therefore gives employees the right, with certain limitations, to criticize an employer during such an effort, so long as the help or involvement of other employees is sought. (You may recall our past advisories, which alerted you to the NLRB striking down various social media policies on the same grounds). Notably and perhaps of even more concern, the NLRB also held that the same agreement’s confidentiality provisions constituted an unfair labor practice, because employees effectively had a Section 7 right to disclose and discuss even non-public information about the company amongst themselves.
In a recent lawsuit initiated by the EEOC in the U.S. District Court for the Northern District of Illinois, EEOC v. Baker & Taylor, Inc. (also attached), the Commission alleged that one employer’s non-disparagement clause also unlawfully prevented workers from cooperating in administrative investigations, a right guaranteed to them by Title VII. This was true even though the non-disparagement clause at issue contained an exception for employees who truthfully responded to a subpoena or “[complied] with a government investigation.” The case was resolved two weeks ago via a Consent Decree in which Baker & Taylor agreed to change its severance agreement.
In sum, these recent developments yet again demonstrate just how difficult it is to effectively draft enforceable provisions in employment agreements, severance agreements and employee handbooks, including but not limited to non-disparagement clauses, waivers of employee rights and claims, and confidentiality undertakings. In fact, the panoply of provisos and exceptions to such agreements (e.g. the ever-expanding list of claims that may not be waived in an employee release even after settlement) caused one client to wonder aloud recently what, if anything, it was getting in exchange for making severance payments to terminated employees. While I would not go that far just yet, I certainly appreciate the sentiment.
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