Legal

NLRB Judge Shoots Down Employee Separation Agreement as Overly Broad

By Jon Hyman

Mar. 29, 2016

Employers prefer finality when they pay an employee severance at the end of employment. One way employers shore up this finality is by obtaining a broad release of claims and covenant not to sue from the employee. But, that is not the only way. Employers use of variety of terms in separation agreements to try to ensure that the agreement is the last they will hear from the employee. That is, unless the employee runs to the NLRB, which seems to believe that there isn’t a policy that doesn’t violate the board’s rules on protected concerted activity.

In Quicken Loans [pdf], an NLRB took issue with three garden-variety terms in an employee’s separation agreement.

1. Confidentiality.

The separation documents … require that he keep secret all proprietary /confidential information, including “client information, employee information, financial information, or any other internal information about Quicken Loans.” … In Advance Transportation Co., the Board found that a rule which prohibited “discussing company affairs, activities, personnel, or any phase in operations with unauthorized persons; to be on its face unlawful because it failed “to define the area of permissible employee conduct thus it is calculated to cause employees to refrain from engaging in protected activities.” Similar reasoning is applicable to this case as the requirement to keep secret employee information is so broad as to potentially encompass directly Section 7 activity and could reasonably be construed by employees to restrict Section 7 activities.

2. Return of Company Property.

General Counsel argues that the return of property rule is overly broad because it restricts employees from providing employee handbooks from government agencies. I agree. At the very least without any language to except the provision of company property to government agencies for lawful investigative purposes the rule is ambiguous and as such is susceptible to the reasonable interpretation that it bars Section 7 activity.

3. No Solicitation of Employees or Customers.

I also find that the rule which restricts employees from contacting or soliciting Quicken Loans’ employees or clients “for any reason” to be overly broad. Within certain limits, employees are allowed to criticize their employer and its products as part of their Section 7 rights, and employees sometime do so in appealing to the public, or to their fellow employees, in order to gain their support. I find an employee reading the document could reasonably conclude that the prohibition contained in the separation documents directly restrict Section 7 rights and thus the rule violates the Act. 

There is no doubt that the NLRB continues to make it harder and harder to be an employer. This judge (and likely the full board) wants an employer to so water down these provisions as to render them meaningless. Yet, without any teeth behind these garden-variety post-employment terms, an employer is not receiving the benefit of its severance bargain. The NLRB continues to flex its protected-concerted-activity muscles in a continuing effort to stay relevant, and employers continue to struggle to keep pace.

Jon Hyman is a partner in the Employment & Labor practice at Wickens Herzer Panza. Contact Hyman at JHyman@Wickenslaw.com.

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