A developing area of labor law focuses on how the National Labor Relations Board continues to scrutinize common provisions in employment settlement and separation agreements—particularly those involving confidentiality, non-disparagement, and cooperation obligations. Settlement agreements have long been a routine tool for resolving employment disputes.
However, recent NLRB decisions—building on its landmark ruling in McLaren Macomb—have significantly reshaped the permissible scope of these agreements. The Board has taken the position that certain broadly drafted provisions may unlawfully interfere with employees’ rights under Section 7 of the National Labor Relations Act, including the right to discuss workplace conditions and engage in protected concerted activity, as reported by Law360.
As discussed in the article, the NLRB continues to focus on whether agreement terms could reasonably be construed to chill employees from exercising protected rights. Provisions that prohibit employees from making negative statements about the employer, disclosing the terms of the agreement, or cooperating with third parties may be deemed unlawful if they are not narrowly tailored. Even standard clauses—historically viewed as boilerplate—are now subject to heightened scrutiny.
Importantly, the Board has clarified that the mere offer of an agreement containing overbroad terms may itself constitute an unfair labor practice, regardless of whether the employee ultimately signs the agreement. This represents a notable shift in enforcement posture and increases risk for employers who rely on legacy templates without revisiting their language.
From a legal and governance perspective, these developments underscore the need for employers to reassess their settlement agreement forms and ensure compliance with evolving NLRB guidance. Careful drafting is essential, including the use of savings clauses, clear carve-outs for protected activity, and limitations on the scope and duration of restrictive provisions.
The broader takeaway is that employers can no longer assume that standard confidentiality and non-disparagement clauses will be enforceable as written. Instead, agreements must be calibrated to balance legitimate business interests with employees’ statutory rights under federal labor law.
Outside Legal Counsel LLP advises companies, employees, and boards on employment law compliance, workplace investigations, and the structuring of enforceable settlement agreements in light of evolving regulatory standards. Contact us today.
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