The National Labor Relations Board’s proposed limits on non-disparagement and confidentiality provisions in its recent McLaren Macomb decision that have sparked a renewed focus on these common agreement terms.
Good corporate hygiene supports regular reviews of template employment agreements. In light of this decision, review should also consider which types of employees these provisions cover.
While the National Labor Relations Act applies both to unionized and non-unionized workplaces, the McLaren Macomb decision construed Section 7 of the NLRA, which gives rights only to non-supervisory employees—unless, as the NLRB General Counsel’s Office explained Tuesday, an employer retaliates against a supervisor for objecting to an employer agreement that violates these rules. As a result, it’s now important to understand who counts as a supervisor under the NLRA.
The term “supervisor” is not universally defined despite its application in many employment contexts, including the NLRA. For example, the “supervisor” label helps employers discern who is entitled to receive overtime, who receives the benefits of a multitude of wage and hour laws, and who might be liable for employment claims.
The question of who exactly is the “boss” is equally important to a host of other employment-related decisions and often confounds human resources and legal professionals, especially in a rapidly evolving workplace.
Who Is a Supervisor Under the NLRA?
At issue in McLaren Macomb was whether an employer violated the NLRA by offering severance agreements with broad non-disclosure and confidentiality provisions to furloughed union employees.
The NLRB found that Section 7 of the NLRA encompasses more than just protecting workers’ rights to have work-related discussions with other workers; Section 7 also protects workers’ discussions with third parties.
In this case, the NLRB determined the severance agreements contained overly broad non-disclosure and confidentiality provisions and, as worded, those provisions implicated Section 7 rights. But the NLRA confers Section 7 rights only to non-supervisory employees. So it becomes important to understand exactly who is a supervisory employee under this law.
The NLRA’s statutory definition of “supervisor” begins the analysis:
"[A] ‘supervisor’ means any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.”
In unpacking this definition, courts emphasize that, while necessary, “independent discretion” alone is not enough to label someone an NLRA supervisor. To be a supervisor, the worker must regularly exercise independent discretion and display one of the enumerated activities, each of which must be performed on the employer’s behalf.
Put simply, an employee is more likely to be a “supervisor” under the NLRA when that employee effectively takes ownership of the employment relationship—being responsible for the failures as well as the successes of the workers or work the person oversees.
Importantly, merely relying on labels is as unhelpful to this analysis as they are to overtime classification. Instead, the key is the employee’s actual duties. And, as with many other worker classification determinations, the burden of proving supervisory status is on the employer.
Importance of Supervisor Label
If the McLaren Macomb decision stands, it could hamper an employer’s contractual ability to limit non-supervisory employees from disclosing information about its operations and speaking negatively about it in any context, including in exchange for equity grants.
Indeed, a ban on non-disparagement and confidentiality provisions for these employees and supervisors in the very limited context of retaliation could undermine important terms for employers, including preventing employees from bad-mouthing the employer or sharing specially negotiated terms.
These outcomes are particularly concerning if employers wish to, for instance, condition severance on preserving the employer’s good name with an aim towards avoiding a negative impact on employee morale.
Further, the McLaren Macomb decision could prevent some employers from crafting bespoke post-employment conditions that can’t be addressed in a one-size-fits-all separation agreement.
Don’t Recycle Templates
As a result, understanding the actual role an employee plays is critical before preparing or modifying agreements containing these provisions.
Note, too, that other laws have already altered the approach employers may take with respect to confidentiality and non-disparagement provisions through growing statutory movements such as the proposed federal Speak Out Act and similar enacted state laws such as California’s Silenced No More Act.
Given the speed of these regulatory developments, employers should not recycle template severance and employment agreements and consider tailoring agreements for supervisory status.
For agreements like separation agreements, which already necessitate applying complex factors regarding age, context, and state law, adding this analysis shouldn’t be a heavy lift. But employers might consider a fresh review of other seemingly benign agreements such as non-disclosure and equity agreements.
Whether modifications are required to comply with evolving legal standards, a recurring and mindful review of employment-related agreements is a worthwhile practice for all employers, supervisors and non-supervisors alike.
The case is McLaren Macomb, N.L.R.B., 2/21/23.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Jennifer Rubin is a member with Mintz, practicing bicoastal employment law. She is chair of the firm’s ESG practice group.
Nicole Rivers is an associate at Mintz, defending employers in high-stakes employment litigation and labor matters, and counseling clients on employment best practices.