When a business terminates an employee, it may negotiate a severance agreement that settles stock options, deferred compensation and other issues. The agreement may sometimes include a non-disclosure or non-disparagement clause or both, prohibiting the employee from discussing confidential matters or speaking ill of the company.

However, a recent National Labor Relations Board (NLRB) decision prohibits employees from requiring outgoing employees to sign severance agreements that contain broad non-disclosure or non-disparagement clauses, on the ground that those clauses improperly waive employees’ rights under the National Labor Relations Act (NLRA).

The NLRA gives employees the rights to assist labor unions and to engage in other concerted activities for the purpose of mutual aid or protection. The law makes it an unfair labor practice to interfere with the exercise of those rights. In its ruling, the NLRB found that workers’ ability to discuss the conditions of employment at a company, whether before or after their employment there, is necessary to the exercise of those rights. That discussion is frustrated by requiring workers to sign a severance agreement that prohibits them from truthfully criticizing the company or discussing the agreement itself.

Your severance agreement might be unenforceable for other reasons. For instance, District of Columbia and federal laws protect whistleblowers who disclose illegal or fraudulent activities by employers or ex-employers. Courts have also struck down confidentiality provisions that are unreasonably broad and restrictive.

If you signed or have been offered a severance agreement in connection with your resignation, layoff or firing, it might contain provisions prohibiting you from disclosing confidential information or from disparaging that company. Such an agreement is not necessarily an unfair labor practice if the prohibition is narrow enough. For instance, the non-disclosure clause might apply only to genuine trade secrets, or the non-disparagement agreement might exempt truthful and legally authorized statements you make about the company.

In order to know if a severance agreement you’re offered or you signed is an unfair labor practice or is illegal under another statute, you should consult with a knowledgeable employment attorney. If the agreement appears to violate the NLRA or any other law, your attorney can try to renegotiate it or, if that fails, can bring an unfair labor charge in your behalf before the NLRB or in court.

Cashdan & Kane, PLLC represents clients in the Washington, D.C. area in employment disputes involving severance agreements and other matters. Call us at 908-264-9331 or contact us online to schedule an appointment.