Proven Trial Litigation. Cost-Effective Representation. Cutting-Edge Legal Solutions.

Cutting-Edge Legal Solutions.

Business litigation could begin after NLRB decision

On Behalf of | Feb 28, 2023 | Business Law & Litigation

Business owners always seek to minimize risk, and one such risk to minimize is litigation. After all, litigation can cost companies thousands of dollars and hundreds of hours in lost time and resources. Unfortunately, one recent decision from the National Labor Relations Board may make business litigation more likely, at least in the near term for local Sacramento, California, and national business owners in the United States.

The National Labor Relations Board decision

The recent National Labor Relations Board decision covers Sections 7 and 8(a)(1) of the National Labor Relations Act and the legality of broadly written confidentiality clauses within severance agreements. In the prior presidential administration, the then-empaneled NLRB found that these types of clauses that stop employees from disparaging their former employers or talking about their severance agreements were legal under Sections 7 and 8(a)(1). But, the newly empaneled NLRB has overturned that decision. They have outlawed broadly written confidentiality clauses within severance agreements.

Why it matters

For business owners, this matters if you have already laid off employees or plan to lay off employees soon. This is because most, if not all, severance agreements currently have broadly written confidentiality clauses, and it is likely that most, if not all of them, do not comply with this new guidance. And, this means that, at a minimum, many of these clauses will not be enforceable, and at worst, some of these severance agreements in their entirety may be found void as a result of these broadly written confidentiality clauses. This is why many business owners are consulting their northern California attorneys immediately.

May not be permanent, but it is immediate

Some business owners may be tempted to see how this plays out because they know that this NLRB decision is appealable, and it surely will be appealed. However, this is not advisable because the NLRB decision is immediately applicable. This means that employees and employers can rely on it now, and can use it as the basis of lawsuits immediately. This is why all northern California businesses should take this new NLRB decision seriously.