KHVPF Insight
The NLRB’s Politically Inclined Policy Shifts Continue To Vex Employers And Unions
Whenever a new political party takes over the White House, membership of the five-member NLRB Board eventually changes with it, leading to a 3-2 split favoring the President’s party. Not surprisingly, shifts in the NLRB’s political majority shift the outcome of disputes between labor and management, leaving employers and unions subject to the whims of politics and unable to predict whether currently-lawful conduct will be treated as unlawful a few years later.
A recent NLRB decision involving McLaren’s Mt. Clemens hospital demonstrates this whipsaw quality of labor law. Early in the pandemic, McLaren furloughed 11 union nurses and offered them severance pay. Under routine practice, severance pay was conditioned on the execution of a release, which contained a non-disparagement and confidentiality provisions. All 11 nurses signed the agreements. Significantly, McLaren did not tell the nurses’ union that the layoff would be permanent, or that it offered them severance, and did not include the Union in discussions with the affected employees.
The union subsequently brought an unfair labor practice charge. An Administrative Law Judge largely agreed. The decision then came before the NLRB, split 3-1 in favor of Democratic appointees, with one vacancy. The NLRB first agreed that McLaren’s direct dealing with represented employees violated Section 8(a)(5) of the Act, imposing a bargaining
obligation on McLaren. Economic exigencies, requiring swift action and excusing time-consuming bargaining, were not sufficiently established. So far so good, assuming the record supported that finding. Even the Republican NLRB Board member agreed that the Employer had violated the Act by direct dealing with the employees.
But the Board did not stop there as it could have done. It then addressed the form of
the Release in the nurses’ severance agreements. Although lawful under then-existing NLRB precedent, the new Board overturned that precedent and declared that releases that contain confidentiality and non- disparagement clauses are unlawful and thus unenforceable. It also held that merely offering such releases violated the law. It ordered the 11 employees reinstated with back pay, and ordered McLaren to negotiate with the union over the nurses’ status once requested by the Union.
Then, a few weeks later, the NLRB’s General Counsel weighed in with Memorandum (GC-23-05) addressing her view on the meaning and consequences of the McLaren decision. It reiterated that McLaren will be applied retroactively, and that the six-month statute of limitations will likely be overridden by the continuing violations doctrine if confidentiality and non-disparagement clauses are maintained or enforced. It stated that while certain confidentiality and non-disparagement commitments
may be lawful, they would have to be narrowly tailored to protect only against defamatory statements or disclosure of trade secrets. The memo suggests that while a blue pencil rule might be used to strike offending provisions while keeping the rest of severance agreements intact, that was not a guarantee — noting only that a customary “savings clause” may merely be “useful.” And it suggested that a disclaimer in a severance agreement preserving an employee’s right to engage in protected activities may not be valid unless it specifies all of the statutory rights implicated, and preserved, despite the release — something few employers will want to do. This guidance further implies that routine clauses like non-compete clauses, non-solicitation commitments, and requirements that the employee cooperate in future litigation might also void a release, even though the memo does not explain how such terms would chill an employee’s statutory rights.
While the General Counsel’s view must pass muster with the Courts and even the NLRB Board itself, employers must expect challenges to the most traditional severance agreements.
To return to the starting point, political activism in the labor relations context creates uncertainty – the reversal of precedent in McLaren is only one of several such decisions that the new NLRB Board is making. The Board’s frantic need to correct what it perceived to be bad precedent concerning the form of releases was unnecessary — in particular, the retroactive application of the decision — and created uncertainty, not only for employers and unions in the represented setting, but also employers whose employees are not represented by a union. Countless releases executed relying on then-existing Board precedents are now called into question. The parties to the collective bargaining process – both employers and unions – deserve to assume precedent means something. Under McLaren, they cannot do so.