How Employers Can Protect Confidential Information and Trade Secrets Following the NLRB’s Recent Guidance on Severance Agreements

On February 21, 2023, the National Labor Relations Board (NLRB) issued McLaren Macomb, 372 NLRB No. 58, in which the board generally held that confidentiality and non-disparagement clauses in severance agreements offered by employers to non-management personnel violate the National Labor Relations Act (the Act). This decision made clear that the rule applies to both unionized and non-unionized workforces. On March 22, 2023, in the wake of this decision, the NLRB General Counsel issued Memorandum GC 23-05 (the Memorandum), providing additional guidance to NLRB employees on how to interpret and enforce the McLaren Macomb ruling. While much has been written about the general implications for employers arising out of McLaren Macomb and the Memorandum, there has been less focus on the Memorandum’s specific impact on employers’ efforts to protect their confidential information and trade secrets.

While McLaren Macomb focuses primarily on non-disparagement and confidentiality clauses in separation agreements, the Memorandum focuses on additional contractual provisions the NLRB may ultimately deem problematic under the Act. For example, the Memorandum opines that traditional confidentiality or non-disclosure provisions that aim to protect employer confidential information and trade secrets may be problematic if they are not narrowly construed. The Memorandum also states that non-compete clauses, non-solicitation clauses and no-poaching clauses may violate the Act—a position consistent with efforts by other federal agencies to narrow the use of restrictive covenants.

In light of these developments, there are several steps employers can take to mitigate the risk that their separation agreements (and other agreements entered into with employees) will be deemed unlawful under the Act.

1. Employers should consider adding temporal limitations to any clauses regarding non-disclosure or confidentiality of their non-trade secret confidential information.
2. Employers must ensure the information they consider confidential is clearly defined, including specifically carving out information that may implicate rights under the Act. The NLRB may view a broader definition of confidential information as having a chilling effect on employees’ rights under the Act.
3. Employers should consider adding a disclaimer (sometimes referred to as a “savings clause”) into any agreement making clear that its provisions are not intended to violate any rights under the Act. While the NLRB has been clear that these clauses do not cure otherwise violative language, the Memorandum states that these carve-outs can be used to resolve ambiguity in an employer’s favor when evaluating whether a clause is unlawful.
4. Employers should evaluate their use of non-competition and non-solicitation provisions, including assessing which employees should be subject to each type of restriction and the breadth of such provisions. These provisions should be narrowly tailored to protect the employer’s interests.

The Memorandum provides a clear window into the NLRB’s desire to expand its jurisdiction and bring claims regarding non-unionized workforces. Taking the simple steps outlined above may help an employer avoid NLRB scrutiny. And most importantly, the above steps constitute best practices for any business looking to ensure the protection of its confidential information and trade secrets.