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McLaren Macomb operates a hospital in Mt. Clemens, Michigan, where it employs approximately 2300 employees. After an election on August 28, 2019, the Board certified Local 40 RN Staff Council, Office of Professional Employees International Union (OPEIU), AFL-CIO (Union) as the exclusive collective-bargaining representative of a unit of approximately 350 of its service employees.

Following the onset of the Coronavirus Disease 2019 (Covid-19) pandemic in March 2020,the government issued regulations prohibiting McLaren Macomb from performing elective and out-patient procedures and from allowing nonessential employees to work inside the hospital.

McLaren Macomb then terminated its outpatient services, admitted only trauma, emergency, and Covid-19 patients, and temporarily furloughed 11 bargaining unit employees because they were deemed nonessential employees.

In June, McLaren Macomb permanently furloughed those 11 employees and contemporaneously presented each of them with a “Severance Agreement, Waiver and Release” that offered to pay differing severance amounts to each furloughed employee if they signed the agreement. All 11 employees signed the agreement.

The agreement required the subject employee to release McLaren Macomb from any claims arising out of their employment or termination of employment. The agreement further contained provisions broadly prohibiting disparagement of McLaren Macomb and requiring confidentiality about the terms of the agreement.

And Administrative Law Judge found that McLaren Macomb violated Section 8(a)(5) and (1) of the National Labor Relations Act (NLRA) by permanently furloughing the 11 employees without first notifying the Union and giving it an opportunity to bargain about the furlough decision and its effects, and by directly dealing with the 11 employees while entirely bypassing and excluding the Union.

However, he found no violation of the Act as a result of the nondisparagement and confidentiality provisions of the severance agreement relying on Baylor University Medical Center 369 NLRB No. 43 (2020). and IGT d/b/a International Game Technology 370 NLRB No. 50 (2020) which reversed a long-settled precedent that provisions in a severance agreement proffered to employees have a reasonable tendency to interfere with, restrain, or coerce the exercise of employee rights under Section 7 of the Act and are thus unlawful..

The National Labor Relations Board issued a decision in McLaren Macomb, 372 NLRB No. 58, returning to longstanding precedent by holding that employers may not offer employees severance agreements that require employees to broadly waive their rights under the National Labor Relations Act.

The decision reverses the previous Board’s decisions in Baylor University Medical Center and IGT d/b/a International Game Technology, issued in 2020, which abandoned prior precedent in finding that offering similar severance agreements to employees was not unlawful, by itself.

The new February 2023 decision, in contrast, explains that simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act. The Board observed that the employer’s offer is itself an attempt to deter employees from exercising their statutory rights, at a time when employees may feel they must give up their rights in order to get the benefits provided in the agreement.

Thus, such clauses must be carefully drafted and narrowly tailored to mitigate the issues addressed by the Board in this case.

“It’s long been understood by the Board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights under the National Labor Relations Act. Today’s decision upholds this important principle and restores longstanding precedent,” said Chairman Lauren McFerran.

Members Wilcox and Prouty joined Chairman McFerran in issuing the decision. Member Kaplan dissented stating “extent law is sufficient to resolve this matter, my colleagues take this opportunity, not raised by the General Counsel until her Brief in Support of Exceptions to the Board, to address circumstances not present in this case and overrule the sound law of Baylor and IGT. On this aspect of their decision, I dissent.”