NLRB Targets Severance Packages and Attorney-Client Communications

December 03, 2021

The National Labor Relations Board could soon overturn Trump-era precedent that freely permits employers to include confidentiality and non-disclosure provisions, among other items, in employee severance agreements.  Meanwhile, a recent decision by an NLRB administrative law judge could open certain company communications with legal counsel and labor consultants—generally considered privileged—to trial discovery.

Strings attached to severance agreements in the crosshairs:  The Board’s legal division has asked the Board to overturn a Trump-era ruling in Baylor University Medical Center, under which employers are freely permitted to include confidentiality provisions, non-disclosure agreements and other contractual conditions in severance agreements.  That precedent was one of many identified in a memo by Board General Counsel Jennifer Abruzzo as a target for reversal by the new Democrat-majority NLRB. 

The Board will revisit the issue in an upcoming case involving terminated employees of a hospital.  If Baylor is overturned, a new standard could require severance agreements to be narrowly tailored to prevent interference with employees’ rights to concerted activity, with the Board invalidating any such agreements that improperly infringe upon such rights, even if the agreements are voluntary. 

Meanwhile, an NLRB administrative law judge (ALJ) challenged the presumption that all communications with counsel are privileged in finding that Google improperly withheld communications with legal counsel during an NLRB unlawful termination case.  Google refused to produce thousands of documents involving communications with counsel and external labor consultants related to a unionization drive, citing attorney-client privilege.

Employer use of labor consultants and other legal services during union campaigns has long been the target of Democratic administrations.  The Biden administration has previously signaled that it may revive the Obama-era “persuader rule,” which created new disclosure requirements for employers, labor attorneys, and consultants.  The ALJ decision, likely to be upheld by the Board, could open the door for company communications with in-house counsel and external labor consultants to be discoverable in unfair labor practice proceedings.

New Amazon election ordered:  The NLRB also has ordered a new union election at an Amazon warehouse in Bessemer, Alabama, ruling that Amazon had intimidated workers and pressured them to cast votes against the union by installing a vote-collecting mailbox at the warehouse’s main employee entrance.  It has been widely reported that given the voting margin in the first election, it is unlikely that the union will prevail in a second election.

Outlook:  Employers can continue to expect the new NLRB to raise attacks on employers in the guise of protecting employee and union rights and tip the scales as much as possible towards unions in union campaign settings.  Employers should take care to examine their severance agreements to ensure—to the extent possible—that they cannot be construed to infringe upon employees’ rights to concerted activity and prepare for the possibility that internal communications with legal counsel may not be privileged in unfair labor practice cases.