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National Labor Relations Board Updated Rule – Severance Agreements

Our firm is committed to keeping you updated on the recent development from the National Labor Relations Board (NLRB) regarding severance agreements. The NLRB has issued a new rule that will impact how companies approach, draft, and execute severance agreements with their employees.

Under the new rule, companies are required to explicitly inform employees that they have the right to discuss the terms and conditions of their employment with their colleagues, including the terms of their severance agreement. The rule also prohibits companies from including language in severance agreements that could prevent employees from engaging in protected concerted activity, such as discussing their wages or working conditions. Further, note that non-disparagement and confidentiality clauses within a severance agreement that infringe or restrict on the employee’s statutory rights are also prohibited.

This new rule is significant because it reinforces the protection of employees’ rights to engage in collective bargaining. It also makes it clear that companies cannot use severance agreements as a tool to restrict employees’ ability to exercise these rights. The NLRB has determined that the precedent on severance agreements was arbitrarily decided, thus, the new rule is adopted as of February 21, 2023.

As always, TLF will keep you informed on any further updates regarding changes in the law. We hope you found this newsletter helpful. If you have any questions or comments, please don’t hesitate to reach out to us.

Best regards,

Trembly Law Firm


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