(CNN) Many questions have been raised about the implications and scope of a recent decision by the National Labor Relations Board to prohibit employers from requiring fired workers to sign certain types of non-discrimination and confidentiality clauses in order to receive severance pay.
Who is covered? Is it retroactive? Can my employer never again ask me to remain silent in return for a severance payment?
CNN Business asked these and other questions to some employment lawyers to get their opinions. Here are their answers.
1. Who does the new ban apply to? Most US private sector employers are subject to the authority of the NLRB and must comply with its decisions.
And their latest decision applies to both their unionized and non-union workers.
“This body signals and reminds employers that the NLRB applies to employers regardless of whether employees are unionized,” said Andrew Herman, associate in the labor and employment practice of the law firm Blank Rome LLP.
2. Who does not fall under the ban? Selected groups are not under the authority of the NLRB.
Federal, state, and local government agencies, including public schools, libraries, and parks, are not under the jurisdiction of the NLRB. Neither do railways and airlines.
Some categories of workers are unlikely to fall under the ban as they are excluded under the National Labor Relations Act, which the NLRB enforces. These include: Supervisors and managers with the authority to hire, fire, compensate and discipline workers, even if their company is itself subject to NLRB authority; independent contractors; rural and domestic workers; and anyone employed by a parent or spouse.
3. Is the judgment retrospective? It’s hard to say for sure. The decision released by the NLRB does not specifically state that it is retrospective, Herman noted.
In general, NLRB decisions can be expected to be retrospective “unless it would be unfair to the employer or would result in an injustice,” said labor counsel Michael Healey of Wagner, Falconer & Judd Ltd. In that most recent case, Healey said, “It’s fair to assume that this may not be because employers have for the past several years offered severance agreements based on a 2020 NLRB decision that was effectively overturned by the committee’s recent decision.” .
But the attorneys CNN spoke to agreed that it’s possible the Labor Department may consider retrospective application if someone files charges of alleged labor violations related to a severance agreement that was signed or enforced within the past six months . There is usually a six month period, similar to a statute of limitations, to bring a suspected breach to the attention of the board.
4. So now employers can never require me to keep quiet about the company as a condition of receiving severance pay? No, they still can under certain circumstances.
Last week’s NLRB decision bars employers from requiring laid-off workers to keep both the terms of their severance agreement and the terms of their work (including wages, hours, health and safety issues, etc.) confidential.
But your employer can still require that you not disclose trade secrets or other confidential information that protects its business interests, Herman noted.
And employers can still ask you to waive your right to make future claims or file a lawsuit against them.
5. How will this new rule affect future severance decisions by employers? It’s easy to forget, but there is no legal obligation for employers to offer severance pay to laid-off workers. But they do so for a number of reasons, not just upholding goodwill towards employees and the surrounding community who may economically depend on the company’s workforce.
They offer compensation to buy protection from things like lawsuits or public slander, disclosure of their trade secrets, or other claims against them.
“I do this because I want to get something from the employee in return. I buy finality [in having to deal with that employee]said Jon Hyman, counsel on the management side and chair of Wickens Herzer Panza’s employment law practice.
But by removing the ability for an employee to require non-disclosure about the terms of their job or their severance agreement, the protections an employer can buy are reduced. So employers might want to pay less for it, Hyman suggested.
“There is a real risk for employees that the case will negatively impact future severance pay levels,” he said.