Examining Mclaren Macomb’s Application Employment Law – Technologist

In April 2023, I authored a blog discussing non-disparagement in employment post-McLaren Macomb and how it may affect both employers and employees. In February 2023, the National Labor Relations Board (NLRB or Board) made its important ruling in McLaren Macomb about the legality of non-disparagement and confidentiality provisions in severance agreements.

As I explained in my first blog, the NLRB is an independent federal agency that enforces the National Labor Relations Act (NLRA). The NLRA primarily deals with private-sector employees’ rights to form or join unions; engage in protected, concerted activities to address or improve working conditions; or refrain from engaging in these activities. These are broadly known as “Section 7 rights,” taking their name from the part of the law where they are located

In McLaren Macomb, the Board reversed its previous 2020 decisions in Baylor University Medical Center and IGT d/b/a International Game Technology and held that simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act. Thus, the severance agreement provisions regarding non-disparagement and confidentiality, which were conditions of receiving benefits under the agreement, were unlawful. The ruling affirmed that employers cannot ask individual employees to choose between receiving benefits and exercising their rights under the NRLA.

How McLaren Macomb Has Been Applied

In the little more than a year since McLaren Macomb was decided, courts have not had much opportunity to issue opinions shedding light on how the decision will be applied in general employment (as opposed to NLRA) contexts. What has emerged so far has not shown McLaren Macomb to be a game-changer yet.

In the first case I was able to locate applying McLaren Macomb, the court was called on to resolve a “fees on fees” petition by an employer who had successfully defended against a claim in arbitration and subsequent motions to uphold the award, which had granted fees to the employer. The employee argued, among other things, that the parties’ separation agreement was unenforceable under McLaren Macomb. The court rejected this argument because the employee did not “analyze the terms of any provision in the Separation Agreement to explain why the provision would fall within the proscription described in McLaren Macomb,” and added (not inconspicuously) that the NLRB’s decision was “non-binding.”

The second case applying the Board’s decision, Choc v. Corporation #1, involved parties seeking the court’s approval of a settlement in a Fair Labor Standards Act action, which contained a mutual non-disparagement clause. The court found the clause (which said the parties would not “in any way maliciously disparage or defame the good name” of the other “in any forum”) to be wanting for clarity, but nonetheless reasonable. This is because the clause went on to say that it did not prevent the plaintiff from “disclosing this Agreement, the underlying facts of his FLSA claims, and/or associated statutory rights” and would not “interfere with Plaintiff’s rights pursuant to Section 7 of the NLRA.” The court noted McLaren Macomb’s discussion of the importance of former employees being able to discuss the terms and conditions of employment, and added that “[m]aliciously defamatory statements, however, fall outside Section 7’s protections,” echoing the same caveat discussed in McLaren Macomb itself.

In the third case applying McLaren Macomb, a former employee sued an IBM spin-off company for age discrimination. The employee had signed a release of claims that also contained a provision requiring confidential arbitration of claims that could not be, or had not been, released and argued that the release language did not validly release the age discrimination claim. In response to a motion to dismiss, the employee invoked McLaren Macomb’s ruling regarding confidentiality provisions in his argument that the invalid confidentiality provision invalidated the entire release agreement, including the mandatory arbitration term.

The court rejected this argument, distinguishing the much broader terms in McLaren Macomb from the subject agreement that required confidentiality for the arbitration proceedings only and did not prohibit disparaging remarks. The court also observed that, had the confidentiality provision been invalid, the subject agreement’s severability clause would save the rest of the agreement.

While it is still too soon to judge McLaren Macomb’s impact on general employment law, these early cases teach that, for example, non-disparagement provisions can survive scrutiny if they are sufficiently circumscribed to prohibit only defamatory statements. Indeed, this has become the new normal in my own experience with separation agreements drafted by employers’ counsel.

And, for employee-side counsel, these cases highlight the need to closely analyze the allegedly offending language in subject provisions and articulate how they run afoul of McLaren Macomb’s holding. Merely citing the case is not a magic spell to undo problematic clauses.

If you or someone you know is searching for answers about this matter, contact us today to see how we may be able to assist with your particular circumstances.

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