The NLRB Limits Use of Confidentiality Provisions in Severance Agreements

Severance agreements are due for a change as the National Labor Relations Board (NLRB) recently ruled that severance agreements containing broad confidentiality and non-disparagement provisions are largely unlawful and unenforceable as violating Section 7 of the National Labor Relations Act (NLRA).

Previously, employers could offer severance benefits to laid-off employees in exchange for agreements limiting prospective claims. Severance agreements customarily included confidentiality and non-disparagement clauses prohibiting employees from discussing the terms of the agreement itself and making statements detrimental to the interests of the employer.

The NLRB’s recent decision in McLaren Macomb, 372 NLRB No. 58 (2023), reestablished that employers cannot offer severance benefits contingent on employees signing severance agreements containing broad terms that interfere, restrain, or coerce employees from exercising their rights under Section 7 of the NLRA, which includes the right to participate in concerted activities for the purpose of collective bargaining or other mutual aid or protection. Notably, Section 7 protections apply only to non-supervisory employees.

In the McLaren Macomb decision, the NLRB explained that simply offering confidentiality and non-disparagement terms in severance agreements violate the NLRA, as such terms themselves have a reasonable tendency of prohibiting current or former employees from exercising their Section 7 rights. The decision rejects provisions that prevent employees from disclosing information contained in the severance agreement to obtain legal advice or assistance from a union representative, speaking to the media, assisting former coworkers, disclosing information to assist in NLRB investigations, or making any comments that could be negative to the employer.

The NLRB explained, however, that non-disparagement and confidentiality provisions may coexist with Section 7 rights if they are narrowly tailored and not so overly broad that they would directly or incidentally interfere with employee-protected rights. Employers and employees should review their severance agreements to ensure compliance with the NLRB’s latest decision.

By: Samuel Hernandez, Attorney; Irma Alvarez, Summer Law Clerk (2023)

EEOC Releases a New “Know Your Rights” in the Workplace Poster

The Equal Employment Opportunity Commission (“EEOC”) released an updated “Know Your Rights” Poster, replacing its previous “EEO is the Law” poster. Employers are required to post the Know Your Rights poster at their worksites. The poster includes the following changes:

• Notes that harassment is a prohibited form of discrimination;

• Clarifies that sex discrimination includes discrimination based on pregnancy and related conditions, sexual orientation, or gender identity; and

• Provides information about equal pay discrimination for federal contractors.

The poster also includes a QR code that can be used to access the EEOC’s website, making it easier to file a charge. The poster can be printed in both English and Spanish.

Contact our office with questions regarding your rights or obligations in the workplace.

Residential Contractors Avoid an Owner’s Statutory Right to Cancel Certain Agreements at Their Own R

Residential contractors do not typically think of their clients as consumers afforded certain agreement cancellation rights under Oregon’s consumer protection laws. While that may be correct when contracting for some jobs, it is not the case in many residential home improvement projects. Contractors that fail to provide the required notice of right to cancel face significant financial risk and losses.

Does the Home Solicitation Sales Act (“HSSA”) Apply to You?

The HSSA, found in Oregon Revised Statute (“ORS”) 83.710 et seq, applies to “home solicitation sales” agreements for work, labor, or services performed for personal, family, or household use upon or in connection with repairs, alterations, or improvements on real property. That definition includes a significant number of projects contractors normally perform, including kitchen or room remodels, painting, roofing, decks, HVAC work, and fences. The HSSA does not apply to new home construction or work performed on business establishment.

For the HSSA to apply, the home solicitation sales agreement must also be signed in a place other than the contractor’s main place of business (i.e., office), such as the homeowner’s residence, a coffee shop, or a restaurant. This is notable because agreements are often signed in a place other than the contractor’s main place of business. It also does not matter whether the homeowner or contractor starts the conversation.

The HSSA also applies to certain telephone solicitations; however, this article focuses only on home solicitations.

What Does the HSSA Require?

Under the HSSA, sellers (contractors) are required to provide buyers (homeowners) with a complete copy of the written agreement entered into to perform the work on the property. The written agreement must (1) include the date the agreement was signed, (2) the residential contractor’s name and place of business address, (3) be in the same language as the language that is principally used in the sales presentation, and (4) include a statement written in a specific manner explaining the homeowner’s right to terminate the agreement within three business days. The statute also requires contractors to orally inform homeowners of their right to cancel and provide two copies of a separate right to cancel notice along with a full copy of the agreement. In particular, the HSSA provides that a “buyer [homeowner] has the right to cancel a home solicitation sale until 12 midnight of the third business day after the day on which the buyer [homeowner] signs an agreement or offer to purchase[.]” ORS 83.720(1).

What if I Do Not Provide the Required Notices?

A homeowner retains the right to cancel the home solicitation agreement until the contractor complies with the notice requirements under the HSSA. This means that a homeowner can potentially cancel the agreement at any time before or during the course of providing the services to the homeowner. In turn, the HSSA requires both the homeowner and contractor to undertake certain acts after the agreement is cancelled. For instance, the homeowner is required, upon written demand, to return to the contractor any goods delivered by the contractor. However, a homeowner is not required to return any property or pay for them if the contractor does not provide a written demand for their return within 20 days after cancellation or revocation of the agreement. The contractor is required to return to the homeowner any payments made by the homeowner within 10 days after the agreement is canceled. ORS 83.740.

The requirements above place non-compliant contractors in the position of being made to return any amounts paid by the homeowner. That is true even where the contractor has already spent significant time, money, and resources in the performance of the contracted work, adding significant risk and losses.

The HSSA does provide an exception to a homeowner’s right to cancel where (i) the homeowner initiates contact with the contractor; (ii) the homeowner requests emergency services without delay using the homeowner’s own document, not provided by the contractor; (iii) the homeowner describes the emergency and expressly acknowledges and waives the right to cancel; and (iv) the contractor in good faith has made a substantial beginning in performance of the contract.

What Should You Do Now?

Contractors should review their processes, procedures, and agreements to ensure they are following statutory requirements. Contractors should also work with their legal counsel to ensure compliance with the HSSA and minimize the risk of possible significant losses.