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Employees Laid Off Cannot Be Muzzled in Exchange For Severance

February 23, 2023 | By Kali Girl

In the unfortunate event of a layoff, some companies may offer severance pay to employees as a form of compensation. However, in accepting these offers, employees may have to agree to certain restrictions, such as keeping the circumstances of their layoff under wraps.

This week, the National Labor Relations Board (NLRB) put employers on notice that they can no longer impose these kinds of restrictions on laid-off employees, reports CNN. The board has ruled that two common types of clauses – confidentiality and non-disparagement clauses – violate employees’ rights under the National Labor Relations Act.

Moving forward, companies can no longer require employees to stay silent about the terms of their severance agreements or prevent them from discussing their employment conditions with third parties through non-disparagement clauses. This ruling is a huge win for employee rights, particularly for those who have been affected by layoffs.

“A severance agreement is unlawful if it precludes an employee from assisting coworkers with workplace issues concerning their employer, and from communicating with others, including a union, and the Board, about his employment,” the board wrote in its decision Tuesday.

Although there is a possibility for the ruling to be appealed, it has taken effect immediately. This means that employers are now obligated to review and potentially modify their severance agreements to ensure that they do not contain any language that is overly restrictive to employees in the two specific ways defined in the board’s decision.

Via email, employment attorney Alex Granovsky told CNN, “Companies are definitely incentivized to silence their departing employees…[because it helps them keep] all the skeletons in the closet.”

“This decision opens the door. While on the one hand sunlight is the best medicine, and greater exposure should lead to better companies, this decision could also change the dynamics of a severance negotiation.”

This ruling is a positive change that could potentially increase employees’ bargaining power, but only time will tell how it will play out.

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