On November 9, 2022, Meta notified over 7,000 of its non-supervisory employees that they were being laid off. Each affected employee was offered a Separation Agreement and Release, which stated that, in exchange for waiving any actual or potential claims and resolving any disputes they may have regarding their employment and separation, the employees would receive enhanced severance pay. Each signed Separation Agreement included a confidentiality and non-disparagement clause.
On February 21, 2023, the National Labor Relations Board (NLRB) found that McLaren Macomb hospital violated employees’ rights under the National Labor Relations Act (NLRA) when it offered overly broad confidentiality and non-disparagement clauses in its severance agreements. The confidentiality provision required the employee not to disclose the terms of the agreement to any third person, other than their spouse, or professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency. The non-disparagement provision required that the employee not to make statements to employees or to the general public which could disparage or harm the image of employer, its parents and affiliated entities and their officers, directors, employees, agents and representatives. The agreement stated that breach of either section could result in substantial monetary and injunctive sanctions against the employee.
The next day, February 22, 2023, a former Meta employee who signed one of the Meta Separation Agreements, filed a charge with the NLRB. The NLRB General Counsel argued that the non-disparagement clause was substantially similar to the ones found in McLaren Macomb, because they required employees to refrain from making any disparaging, critical, or otherwise detrimental comments to any person or entity concerning Meta’s products, operation, or circumstances surrounding their separation. The General Counsel argued that the confidentiality provision was also substantially similar to the one found unlawful in McLaren Macomb, because it required employees not to disclose to others any terms of the agreement, other than their spouse, immediately family, accountant, tax advisor, arbitrator, or court of law. The concern was that employees could not discuss the terms of the Separation Agreement with other employees in similar situations, and would chill them from discussing labor issues and disputes with third parties, including the public. The General Counsel argued that this ran afoul to the NLRA.
Meta argued that the Separation Agreement differed from McLaren Macomb because Meta included safe harbor sections (also known as a savings clause) that made clear that employees were not limited in their ability to assist the NLRB in an investigation of an alleged violation or to assist other employees in this regard. Specifically, the savings clause stated that employees were free to initiate communication with, cooperate, and provide relevant information to the Board and were free to participate and assist in an investigation or proceeding related to an NLRA violation.
The Administrative Law Judge (ALJ) found that the non-disparagement clause as written would chill employees from engaging in protected conduct, including making comments to seek assistance and support from other employees. Similarly, the NLRB found the confidentiality section would discourage employees from discussing the terms of their Separation Agreement with fellow employees or third parties, including the public.
The ALJ also found that the savings clause did not go far enough because it did not cover all of the rights protected under the NLRA. It allowed employees to communicate with and assist the Board, but did not explain what types of disclosures and commentary were permitted. The placement of the savings clause was four and five pages away from the non-disparagement and confidentiality clauses, which the ALJ found was too remote to provide meaningful clarification to the limitations. Finally, the sections did not contain time limits. Taking these reasons together, the ALJ found that the sections violated McLaren Macomb.
The ALJ applied the McLaren Macomb decision retroactively and ordered Meta to cease and desist from using these sections of the Separation Agreement. Meta was also required to post a notice that it would no longer enforce the confidentiality and non-disparagement clauses in the Separation Agreements.
Note: This is one of the first cases applying the NLRB’s recent decision in McLaren Macomb and it provides helpful guidance to schools as they provide severance agreements to employees upon separation. In this case, the judge found that the savings clause did not go far enough and that the decision applied retroactively. LCW is prepared to assist schools issuing severance agreements.
Meta Platforms, Inc., 2024 NLRB LEXIS 332 (N.L.R.B. July 19, 2024).