This transcript has been auto-generated using Adobe Premier Pro.
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Tom Godar
Hello and welcome to the Husch Blackwell Labor Law Insider. I'm Tom Godar your host. I'm excited to share with you the developments in labor and employment law that we're seeing across the board, and particularly through the National Labor Relations Board and General Counsel Abruzzo. When President Biden was elected, he said he was going to have the most employee and union friendly administration ever, and he has fulfilled that pledge.
00;00;28;08 - 00;00;47;28
Tom Godar
I have HB colleagues and others where I thought leaders around the country taking a look at some of the issues challenging employers and giving them pause for consideration and maybe making some changes in their own workplace. So as we move forward on our Labor Law podcast, get ready and buckle in for a wild ride exploring the Labor Law Insider.
00;00;50;00 - 00;01;33;26
Tom Godar
It is great to have you join us once again for the Labor Law Insider. And well, we started off the year with some general advice on unions and management and integration of your policies with creating opportunities for employers to feel that they're connected to the employer. We're going to pivot big time to some really topical stuff. Today, we're going to talk about a General Counsel memorandum that was just released last week based on a decision that was only released at the end of last month, which has huge implications for employers in how they're conducting their day to day activities as this host Tom Godar of the Labor Law
00;01;33;26 - 00;02;10;27
Tom Godar
Insider and I am really excited to be joined by two of my colleagues who have been labor law insider aficionados. We've got Tom O'Day coming to us from Husch Blackwell's Wisconsin office in Madison, and Terry Potter, formerly a border agent, now is on the right side of the issues, joins us from our Kansas City office. And both of them have practices that are nationwide and are watching the changes under the Biden administration and General Counsel Abruzzo take place with their clients in real time, as I am.
00;02;11;01 - 00;02;38;13
Tom Godar
And in fact, it was just recently that Tom O'Day and I were working on some agreements for employers that would be leaving behind some employees and what those agreements would have to look like under the new ruling. At that time it was the McLaren Macomb ruling that we had to pivot against. But last week the general counsel for the National Labor Relations Board, Jennifer Abruzzo, released her memorandum
00;02;38;13 - 00;03;07;21
Tom Godar
GC 2305 provides me an all out because clarification of the McLaren Macomb decision. I'd call it amplification and intensification of that decision, taking it into to me some really surprising areas that are going to affect non-disparagement and confidentiality clauses in settlement agreements, in policies, and maybe even in past settlement agreements and policies that have been on the books for you for years.
00;03;08;26 - 00;03;22;01
Tom Godar
Let's get started with this big question, I guess, Tom, tell us a little bit. What did the McLaren Macomb decision do? What was its intent and what was the impact, if you could give it to us quickly?
00;03;23;05 - 00;04;14;15
Tom O'Day
Sure. So the decision in late February from the National Labor Relations Board really touched on two common provisions that are included in separation, severance or other types of agreements related to one non-disparagement and two nondisclosure of the agreement itself, or confidentiality of the agreement and the language that was at issue from this employer was was very broad. And the National Labor Relations Board said that the use of that very broad non-disparagement provision and the use of that very broad nondisclosure provision were such that it was a violation of the employee's rights to engage in protected concerted activity, the ability to talk about the agreement or talk about their employer with other employees or a union
00;04;14;15 - 00;04;15;22
Tom O'Day
or any other third party.
00;04;16;00 - 00;04;32;12
Tom Godar
You say the employers, Tom and Terry, you can chime in, too. That's not all of the employees. Oftentimes, we're asked to create a severance agreement, and even with a really happy ending for an executive, does it affect all employees equally, or is this for a subset of employees who have to take that one.
00;04;33;19 - 00;05;24;15
Terry Potter
I’ll jump in. Yeah, it's it's been made clear - excuse me - it's been made clear with the general counsel memo that the finding or decision also includes coverage of supervisors in those situations. And this is nothing new in those situations where an employer acts in a retaliatory fashion against a supervisor and enforcement of the service provision. Again, that's been the law forever in terms of supervisors can come under coverage of the act in those rare occasions where there is retaliation for a supervisor not following an employer's desire to violate the law in some fashion.
00;05;25;19 - 00;05;43;22
Terry Potter
So, yeah, you know, it probably will never happen. Probably never see a case on this, but it is something we'd still have to look at in terms of drafting these agreements to make sure we lock everything down and don't have any wiggle room in terms of potential liability.
00;05;44;11 - 00;06;16;25
Tom Godar
So no surprise that you can't go ahead and discipline or terminate a supervisor for his or her refusal to violate the act and then tell them they got to keep their mouth shut. Exactly. Get but but but guys, this GC memo, I thought it broke some new ground and amplified it merely rather than merely clarifying some of the policies that maybe we would have seen under the Obama administration that might have been stripped back a little bit under President Trump's National Labor Relations Board majority.
00;06;17;05 - 00;06;45;23
Tom Godar
But for instance, I settled a case about four or five weeks ago. In that case, it had what I call a traditional non-disparagement nondisclosure provision. And let's argue that the employee could be in a bargaining unit. Do I have to go back now and change this? What's what's the timing of this? Does it affect agreements that we made six months ago, three months ago yesterday?
00;06;46;05 - 00;07;12;15
Terry Potter
It does. I mean, what the GC memo makes clear is that the mere maintenance of a outstanding agreement which has these arguably broad terms is sufficient by itself for a violation to be found. So back to really the statute limitation disappears for all intents and purposes. So it's, you know, a very broad reach by the general counsel.
00;07;13;24 - 00;07;29;05
Tom Godar
Well, if we were talking about a specific client, I'd say, Hey, Tom, do you and I have to compose a letter to send to the employer to approve, to send to the employer and say, oh, by the way, I didn't really mean that you can go ahead and disparage the heck out of us, but feeling too comfortable with that.
00;07;29;25 - 00;08;04;16
Tom O'Day
Right. I think in the general counsel's, frankly, impractical world of labor relations, that what is what she would like to see, but practically that's not something that is easy for employers to do. And I think there's a way to read the National Labor Relations Board's general counsel memo as a strong recommendation that employers look backwards and go to those employees for whom they've provided these non-disparagement or nondisclosure agreements and essentially give a mea culpa and say, we messed up.
00;08;04;16 - 00;08;33;23
Tom O'Day
You can disparage, you can share the information that's in this agreement. But practically, that's that's not something that that that that works, frankly. But it is something that the general counsel is going to be looking for. She mentions that when the regions are looking at settling cases, that is a consideration that they need to take into account. And depending on the level of enforcement for the retroactive application of this McLaren Macomb decision, that's something we could see from the General Counsel's office.
00;08;34;21 - 00;08;45;04
Tom Godar
Let's organize these thoughts a little bit for our audience. First, can we still have severance agreements that include a non-disparagement and nondisclosure clauses?
00;08;45;26 - 00;09;23;19
Terry Potter
Yeah, we can. As Tom says. Yeah, absolutely we can. It's just a matter of certain terms. The board has made us aware We need to focus on one being the non-disparagement language and the other is the nondisclosure or confidentiality provisions which can take place in a various contexts. And that's a troublesome part. The DC memo, frankly, expands the binding of the and the board's decision, said in an email sent around to our group here at the firm.
00;09;24;05 - 00;09;36;18
Terry Potter
It's more a lemons into lemonade. So you know, I just shake my head when I read this. She's overreaching in terms of the scope of the decision.
00;09;38;06 - 00;09;56;24
Tom Godar
Assuming that's true, it's still going to be guidance to all of the board regional directors and the agencies in it. So even if it's, quote, overreaching beyond what the board has ruled in the particular case, this is still going to help guide the various regions as to how they're being expected to enforce the act. Isn't it?
00;09;57;26 - 00;10;38;12
Terry Potter
Yeah, absolutely. That's the case. On the other hand, I think there are going to be some challenges out there. And when you start talking about settlement of these cases, they're going to say, no, I'm following what the what the board's decision says. I'm not following what the GC is saying here, and they're allowed to do that. Then I've been successful in other situations where the GC has overreached quite certain settlement terms needed to be included in her mind through her various guidance memos that the ALJ say, No, I'm not necessarily, I'm not going to abide by your your guidance in matters.
00;10;40;24 - 00;11;02;12
Tom Godar
ALJ means administrative law judge and well there also, if you will, getting their check from the National Labor Relations Board. They have a good deal of independence to appreciate, interpret and apply the law, whether it's in the decision making process or before that in the process that leads to resolution of charges before there's been a full trial and decision, correct?
00;11;03;01 - 00;11;23;06
Terry Potter
Absolutely. And the key is that they're the ones getting dumped on here. I mean, they're the ones going to be overwhelmed to avoid negation and stuff like that, too. She doesn't care about that. So the O'Jays are fighting back and settling cases contrary to certain directives set out by the GC.
00;11;24;11 - 00;11;43;06
Tom Godar
Hey, Tom, if we can have non-disclosure, non-disparagement, but they have to be, quote, narrowly tailored. I think that's the phrase used by the GC. Give us a, for instance, of what it might sound like or look like to have a narrowly tailored disparagement or non-disparagement clause in a settlement agreement or a release agreement.
00;11;44;00 - 00;12;16;09
Tom O'Day
Sure. I think for purposes of non-disparagement, the non-disparagement restriction that is focused on the employee not disparaging the products or services of the company will be important. The general counsel and the National Labor Relations Board hinted, and I guess the general counsel expanded the idea that a non-disparagement provision and even a nondisclosure provision should have some kind of temporal limitation on a two or five year period of time when the provision does apply.
00;12;17;04 - 00;12;43;00
Tom O'Day
They also talked about the need and the general counsel does recognize the availability to use things like those savings clauses that say nothing in this paragraph or section shall restrict the employee from their protected concerted activity and rights. Under the National Labor Relations Act, the General Counsel did approve the idea of the severability of these non-disparagement and nondisclosure provisions.
00;12;43;00 - 00;13;12;17
Tom O'Day
So that's a provision that should be in every one of these severance agreements. And generally, I think the general counsel made it sound like there is there is room for a confidentiality or non-disclosure restriction as well. And one of my greatest fears after the decision, knowing the general counsel was going to opine on the decision, was that the general counsel would make it almost an inadvisable to include any non-disclosure restriction.
00;13;12;29 - 00;13;30;16
Tom O'Day
But she didn't go quite that far. She did recognize the idea that if you have a nondisclosure restriction that is narrowly tailored may have to be time limited and may have to be narrow with respect to whom it applies, you can have a restriction that says you can't share the financial terms of the severance agreement with others.
00;13;32;06 - 00;14;06;06
Tom Godar
The one of the things that surprised me, well, at least, was something that should be taken into account. I'd love to have your your thoughts on this, Terry. Is that merely proposing an overbroad agreement under the GSEs? New interpretation or interpretation of the earlier decision itself, evidence of an unfair labor practice today? Does that overly broad that I just discussed it, or is it true that represents something that has not all of the bells and whistles that Tom just talked about?
00;14;06;14 - 00;14;08;18
Tom Godar
I might be participating in an update.
00;14;09;00 - 00;14;28;14
Terry Potter
Yeah, absolutely. Now, given that guidance, that is what she's saying, exactly what she's saying to even the proffer of the of the summary agreement containing these terms that are just outlawed now or separate overbroad will result in a violation of the act.
00;14;28;29 - 00;14;54;20
Tom Godar
Now, when I when I negotiate something, I might say I'll offer you one and they want ten and we'll agree on three. I can't do that with those kinds of provisions. It sounds like I can't say I'm going to offer this breadth of the nondisclosure, this breadth of non-disparagement, and you come back and say it's overbroad, because my first act might have put my clients or the clients first act might have put itself in deep water in terms of an unfair labor practices.
00;14;54;20 - 00;14;55;03
Tom Godar
They're right.
00;14;55;11 - 00;15;11;13
Terry Potter
That's right. And what's missing from the GC memo in particular is any reference to a situation where an individual employee may be represented by counsel and the impact of that relationship on negotiating these agreements or even making the offer?
00;15;12;25 - 00;15;36;10
Tom Godar
You know, Tom and I, you've walked through a number of cases that have to do with anti-competition agreements, whether or not people after they've left an employer can go and work for another employer in the same type of job, at the same kind of area where that competition would be important. And oftentimes there's negotiations and how broad that restriction would be.
00;15;37;15 - 00;15;57;28
Tom Godar
And in this kind of case, is there some implication that even those kinds of restrictions on competition and where you can go and participate in the marketplace might somehow now wind its way into the National Labor Relations Act as opposed to being contract issues and so forth?
00;15;58;19 - 00;16;27;01
Tom O'Day
I do think one of the biggest surprises from the general counsel's memo and it has frankly nothing to do with McLaren Macomb was the general counsel statement that she sees other types of agreements like non solicitation non-compete clauses as interfering with employees existing rights to protect a concerted activity. And that isn't necessary to any kind of clarification of the McLaren Macomb decision.
00;16;27;01 - 00;16;41;26
Tom O'Day
But the general counsel put it out there that non-compete clauses, non solicitation clauses, employee anti rating or anti-poaching clauses are all on the list of things that she would like for the National Labor Relations Board to go after.
00;16;42;19 - 00;17;09;01
Tom Godar
You know, we've talked about the Biden administration as being the most pro-union and pro individual employee administration that we've ever seen. They took great pride and taken a lot of administrative actions, not legislative, but administrative actions to make. That's true. Didn't we already hear about the administration's attack on non-compete agreements, but not in the DOL standard, but in other administrative settings?
00;17;09;10 - 00;17;19;13
Tom Godar
This is this isn't new. It just seems like Jacob Russo has jumped on that same bandwagon, but taking a whole different set of laws to try to achieve the same end. Right.
00;17;19;23 - 00;17;44;08
Tom O'Day
And the question the big question is whether there is a balance that allows for inappropriate circumstances. The use of things like anti rating and no solicitation and non-compete clauses. When you've got an executive, if it is a true supervisor in the National Labor Relations Act, they will be outside of the the restrictions that the general counsel may try and impose on them under the National Labor Relations Act.
00;17;45;00 - 00;18;02;01
Tom O'Day
But you might have a circumstance where a non supervisory employee is appropriately limited with respect to soliciting customers or patients or other employees of the company. And that is where some of the the general counsel's enforcement may come into play in the future years.
00;18;03;09 - 00;18;36;14
Tom Godar
Well, I know that for many of my clients, where they've had us help them in agreements over a decade, two decades, three decades, they have on their computers a template it sounds to me like our clients and everyone in this had better engage in reviewing and probably redoing their template for a severance and release agreement that was now going to at least be arguably appropriate under the law.
00;18;36;14 - 00;18;55;20
Tom Godar
Have savings clauses have temporal restrictions on how long some of the nondisclosure and non-disparagement obligations continue? Is there really an exception to that? Are there any old agreements that we probably have on ourselves that we don't have to tweak and likely that our clients or our friends would have to tweak?
00;18;56;04 - 00;19;25;24
Tom O'Day
I think it's it's definitely something to look at. You need to pull out any old agreements that you might use or templates that you might have used in the past and walk through the different risk considerations with respect to how broad or how narrow those those provisions are. And again, one of the biggest considerations is are you using those types of restrictions, non-disparagement, non-disclosure restrictions for supervisory employees, or are they for employees who are protected under the National Labor Relations Act?
00;19;26;14 - 00;19;39;12
Tom O'Day
But then you have to look at things like the temporal limitations and how narrowly tailored are they? Is there a severability provision? Is there a savings clause? And you might have to work some more of those types of provisions into the agreements.
00;19;40;04 - 00;20;13;18
Tom Godar
Thanks a lot for those insights, guys. I think we have to continue because there's a lot more to not only the McLaren Macomb decision but the GC memo, and it's going to impact more than just employment agreements. I think we're going to see an impact on a number of other areas. So if you guys all agree, let's let's keep this going and we'll roll it and we'll have a part two to discuss some of the other developments, the impact upon policies, the impact upon non-compete agreements and all that the GC memo suggests might be coming down the pike.
00;20;14;04 - 00;20;35;18
Tom Godar
Thanks again, fellas, for joining us and thank you for listening to the Labor Law Insider. Feel free to share this with your friends and your colleagues if you find it have any value. So please join me as we continue this discussion in the next week or so as we discuss further changes that you might anticipate as a result of the decision, as well as the General Counsel Memorandum. Take care.