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Inside This Issue
1. NLRB General Counsel Issues Memo with Guidance to Regions on Severance Agreements
2. Speak Out Act and Workplace Harassment
3. Seventh Circuit Imposes $192,000 in Penalties and Other Remedies Based on Contempt Finding
4. NLRB Details Potential Remedies for Repeated or Egregious Misconduct
NLRB General Counsel Issues Memo with Guidance to Regions on Severance Agreements
On March 22, 2023, NLRB General Counsel Abruzzo issued a memo to all Field Offices with guidance on the NLRB’s recent decision in McLaren Macomb, in which the NLRB returned to longstanding precedent holding that employers violate the National Labor Relations Act (“Act”) when they offer employees severance agreements that require employees to broadly waive their rights under the Act. The guidance will assist Regions in responding to inquiries from workers, employers, labor organizations, and the public about implications stemming from the case.
The memo offers guidance on the decision’s scope and effect, such as the retroactive effect of the decision and the application of the decision to supervisors. The memo also provides guidance on the kinds of severance agreement provisions that could violate the Act if proffered, maintained, or enforced, including confidentiality, non-disclosure, and non-disparagement, among others.
“Lawful severance agreements may continue to be proffered, maintained, and enforced if they do not have overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees” said General Counsel Abruzzo. “[However], the future rights of employees as well as the rights of the public may not be waived in a way that precludes future exercise of Section 7 rights, including engaging in protected concerted activities and accessing the Agency.”
Employers should be cautious when adopting severance agreements.
Speak Out Act and Workplace Harassment
The Speak Out Act follows the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which was signed into law on Mar. 3, 2022. The Speak Out Act bans the enforcement of pre-dispute nondisclosure or nondisparagement clauses in cases involving sexual assault or harassment.
The Speak Out Act applies to agreements (past, present, and future) between an employer and an employee as well as an independent contractor and any claim of sexual assault or harassment brought under federal, state, or tribal law after Dec. 7, 2022.
Nondisclosure clauses in which employees agree to keep confidential the facts of any future sexual assault or harassment are now unenforceable. The Speak Out Act does not prohibit an employer and employee from signing a nondisclosure or nondisparagement agreement as a result of a settlement if allowable under applicable state law. Also, employers are allowed to utilize nondisclosure agreements to protect their trade secrets and other proprietary information as well as other permitted activities.
1 in 3 women has faced sexual harassment in the workplace during her career, and an estimated 87 to 94 % and most sexual harassment victims never file a formal complaint.
The Act makes pre-dispute, non-disclosure and non-disparagement clauses covering sexual harassment or sexual assault allegations unenforceable in court.
A “Sexual Harassment Dispute” is a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law. For example, under Title VII, sexual harassment is an unwelcome sexual advance, request for sexual favor, and/or other verbal or physical harassment of a sexual nature.
A “Non-Disclosure Provision” is a provision in a contractor agreement that requires the parties to the contractor agreement not to disclose or discuss conduct, the existence of a settlement involving conduct, or information covered by the terms and conditions of the contractor agreement.
A Nondisparagement Clause an agreement that requires one or more parties to the contract or agreement not to make a negative statement about another party that relates to the contract, agreement, claim, or case.
IL Bans NDA in sex harassment settlement (and other harassment and discrimination settlements) unless:
- Complainant wants it;
- Complainant has 21 days to consider;
- Complainant has 7 days after signing agreement to revoke; and
- Specific additional disclosures are made
OR: Bans NDAs in sex harassment settlement (and other harassment and discrimination settlements) unless:
- Complainant wants it;
- Employer provides complainant with a copy of its anti-discrimination policies; and
- Complainant has 7 days after signing agreement to revoke
8 states (plus Washington, D.C.) and 3 cities require private employers to conduct training: CA, Chicago, CT, D.C., DE, IL, ME, NY, NYC, IL, WA.
Employers in Illinois must disclose adverse judgments involving sexual harassment and discrimination to the Illinois Department of Human Rights annually. The IDHR may also request settlement data during its investigations.
Seventh Circuit Imposes $192,000 in Penalties and Other Remedies Based on Contempt Finding
On March 10, 2023, the Seventh Circuit Court of Appeals issued an opinion finding that Neises Construction Corporation (“Neises”) of Crown Point, Indiana, it is required to bargain with the Indiana/Kentucky/Ohio Regional Council of Carpenters (“the Carpenters”) and pay $192,400 in fines, among other remedies, based on a finding of contempt of prior court orders.
In 2018, the Seventh Circuit enforced a NLRB decision ordering Neises to bargain in good faith with the Carpenters. Despite the order, Neises began what would become a years-long pattern of delay, legal maneuvering, and bad-faith negotiations with no sincere intent to reach agreement. Twice, in 2019 and 2020, Neises promised to bargain with the union to settle allegations that it was in violation of the Court’s order. Nearly as soon as the last settlement was reached in 2020, however, Neises took bargaining positions that were tantamount to retracting prior tentative agreements, including a provision that would bar the Union from taking any part in decision making about the hours and working conditions of its membership, as well as a grievance procedure that was essentially illusory.
Then, the Court held Neises in contempt. The Court noted: “Parties must make reasonable efforts to comply with our orders, not engage in crafty feints designed to avoid court-imposed obligations. … Neises significantly violated our unambiguous command to bargain in good faith with the Union and failed to make reasonable and diligent efforts to comply with that command.”
The Court imposed $192,400 in contempt fines, awarded compensatory damages to the Union, awarded costs and attorney’s fees to the NLRB, extended the six-month decertification bar protecting the current Union as the exclusive bargaining representative, and ordered Neises to post a notice to its employees explaining the Court’s judgment and describing the steps it will take to remedy its misconduct, in addition to other remedies.
“The Seventh Circuit’s decision in Neises sends a clear message to employers—when workers vote for union representation, an employer must bargain in good faith,” said General Counsel Jennifer Abruzzo. “The NLRB will not permit workers’ choices to be undermined and their voices to be silenced through bad faith bargaining by this or any other employer.”
NLRB Details Potential Remedies for Repeated or Egregious Misconduct
In a new decision issued April 20, 2023 by the National Labor Relations Board (“NLRB”) in Noah’s Ark Processors, LLC D/B/A WR Reserve, the NLRB detailed potential remedies it will consider in cases involving Respondents who have shown repeated or egregious disregard for employees’ rights under the National Labor Relations Act (the Act).
The NLRB determined that when the unfair labor practice violations found in a case justify a “broad” cease-and-desist order (traditionally ordered in cases where the Respondent has shown a proclivity to violate the Act or has engaged in egregious or widespread misconduct), in addition to the cease-and-desist order, the NLRB should consider a non-exhaustive list of potential remedies, discussed in depth in the Noah’s Ark decision and, depending on the circumstances of the case, apply some or all of those remedies. The NLRB’s discussion of these potential remedies is part of an effort “to bring greater consistency to the NLRB’s exercise of its remedial discretion, and to better ensure that all appropriate remedies are ordered in any given case.” The remedies may include:
- Adding an Explanation of Rights to the remedial order that informs employees of their rights in a more comprehensive manner;
- Requiring a reading and distribution of the Notice and any Explanation of Rights to employees, including potentially requiring supervisors or particular officials involved in the violations to participate in or be present for the reading and/or allowing presence of a union agent during the reading;
- Mailing the Notice and any Explanation of Rights to the employees’ homes;
- Requiring a person who bears significant responsibility in the Respondent’s organization to sign the Notice;
- Publication of the Notice in local publications of broad circulation and local appeal;
- Requiring that the Notice/Explanation be posted for an extended period of time;
- Visitation requirement, permitting representatives of the NLRB to inspect the Respondent’s bulletin NLRBs and records to determine and secure compliance with the NLRB’s order;
- Reimbursement of Union’s bargaining expenses, including making whole any employees who lost wages by attending bargaining sessions.
Applying these principles to the facts of the case, the NLRB upheld the Administrative Law Judge’s decision that the employer bargained in bad faith with the union and determined that—because the employer had also previously been found in violation of the Act, as well as in contempt of a U.S. District Court injunction ordering it to bargain in good faith—the employer’s open hostility toward its responsibilities under Act warranted a broad order and appropriate remedies. In addition to traditional remedies for refusal to bargain, such as rescission of unilateral changes and make-whole relief, and in addition to additional remedies ordered by the judge—including reimbursement of bargaining expenses and a reading of the NLRB’s notice to employees—the NLRB ordered: the addition of an Explanation of Rights to the remedial order, a bargaining schedule with written progress reports, reimbursement of the union’s bargaining expenses and earnings lost by individual employees while attending bargaining sessions, extended posting of the Notice and Explanation of Rights for one year, electronic distribution of the Notice and Explanation of Rights, mailing of the Notice and Explanation of Rights, reading of the Notice and Explanation of Rights in English and Spanish by the Respondent’s CEO or by a NLRB agent in the CEO’s presence, union presence at the Notice reading upon request, distribution of the Notice and Explanation of Rights to employees at the reading, and authorizing a NLRB agent to enter the Respondent’s facility for a period of one year at reasonable times for the purpose of determining whether the Respondent is in compliance with its posting and mailing requirements under the NLRB’s order.
Chairman Lauren McFerran said, “Our aim is to ensure that in every case involving repeated or serious misconduct, the Board will consistently consider and implement a full range of potential remedies, so that our actions will make victims of unfair labor practices whole, while ensuring that employees not only understand their rights under the Act but also feel free to exercise them going forward.”
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