The Board sent shockwaves through employment law in its February 21, 2023, decision in Mclaren Macombwhich held that simply offers a draft settlement agreement with broad confidentiality and non-disparagement provisions violated the National Labor Relations Act (“NLRA”). We previously blogged about the mclaren decision and encourage you to read that post for a summary of the decision.
mclaren left unanswered a host of critical questions and, in the month following the decision, employers have not received any further clarity from the Board regarding how this decision will play out in practice. But some clarity—welcome or unwelcome—is coming. At some point this week, General Counsel Jennifer Abruzzo plans to release a guidance memo that will elaborate on the Board’s position.
From Cary and my perspectives, we would welcome clarification from the Board on the following:
- Whether the decision is retroactive.
- Employers should assume that it will be retroactive. Barring exceptional circumstances, the Board tends to make even major changes in doctrine retroactive.
- Whether and to what extent employers have obligations regarding confidentiality or non-disparagement provisions that do not comply with mclaren.
- For example, in the FTC’s pending proposal to ban non-competitors, the FTC has included an affirmative recession requirement. Will employers be required to undergo and exhaustive and expensive review of its confidentiality obligations to employees to try to ferret out non-compliant language?
- What is the standard for evaluating whether an agreement is too broad?
- Will the Board look to how an agreement could theoretically be used to suppress activity protected by the NLRA, or will the examination be specific to the circumstances actually before the Board?
- Assuming that the agreement is overbroad or non-compliant in some respects, would the agreement be blue-penciled, reformed, or void in its entirety?
- Historically, states addressed overbroad confidentiality provisions through three different approaches. First, a state may void the restriction if any aspect of the restriction is overbroad. Second, a state may allow the court to blue-pencil the agreement by striking out overbroad language, though the court could not insert a new language. Third, a state may allow a court to equitably reform the restriction by allowing the court to revise the provision—whether by striking overbroad language or inserting new restrictions—that rendered the provision enforceable.
- If a confidentiality or non-disparagement provision is overbroad, is it void or voidable?
- This decision does not address return of property provisions or other restrictions. Are those affected by this decision?
- Does this decision impact post-employment restrictions on confidentiality or trade secret information?
- Does mclaren apply to settlement agreements with departing employees? If it does, can employers keep aspects of the agreement, such as the amount of consideration in a settlement, confidential?
We will follow up with an update and analysis after the Board releases its guidance memo later this week.