Companies can no longer demand employees keep quiet to receive severances: National Labor Relations Board

Companies can no longer demand employees keep quiet to receive severances: National Labor Relations Board
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Economy

Last month, the Federal Trade Commission approved a new measure in a three-to-one vote that would prohibit employers from forcing departing employees from signing non-compete agreements, which prevent "workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand.”

JDSUPRA noted on Monday that "the proposed rule is now open for public comment for 60 days and, then, the FTC would elect to implement (or not) a final rule. If the FTC takes that step, any final rule will become effective 180 days following publication. While nowhere near the final stages yet, any final rule enacted by the FTC undoubtedly would face significant legal scrutiny in the courts."

Yet the FTC's reform is only one facet of the ongoing efforts to boost equity for people who are between jobs.

READ MORE: FTC chair: Non-compete clauses 'inflict major harm across the economy' and 'drive down wages'

On Tuesday, the National Labor Relations Board ruled that businesses can no longer impose what are effectively gag orders on recipients of severance packages.

"Employers can no longer demand laid-off employees avoid publicly disparaging the company as part of their severance agreements, nor can they stop affected employees from disclosing the terms of their exit packages," Vice News reported. "Doing so, the federal agency determined, would be a violation of the laid-off employees’ rights under the National Labor Relations Act."

This change, Vice noted, reverses two prior decisions that the NLRB now admits fell short of acknowledging that "unlawful provisions in a severance agreement proffered to employees have a reasonable tendency to interfere with, restrain, or coerce the exercise of employee rights.”

Chairman Lauren McFerran said in a statement that "it's long been understood by the Board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights under the National Labor Relations Act. Today’s decision upholds this important principle and restores longstanding precedent."

READ MORE: The Biden administration moves to end noncompete agreements and worker exploitation

Vice News' full report is available at this link.

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