Employment Law Daily NLRB: Signing severance agreements didn’t waive right to pursue charges for wrongful discharge
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Friday, August 24, 2018

NLRB: Signing severance agreements didn’t waive right to pursue charges for wrongful discharge

By Ronald Miller, J.D.

Employees who signed severance agreements did not waive their right to pursue Board charges based on their discharges, ruled a divided three-member panel of the NLRB. Finding that the severance agreements were part and parcel of an employer’s effort to prevent any of its production employees from winning union representation, the Board observed that it is well-established it would not uphold a severance agreement that “was not a bona fide offer of settlement, but was extended as part of a broader scheme to eliminate union supporters.” Member Kaplan filed a separate opinion dissenting in part (A.S.V., Inc. aka Terex, August 21, 2018).

On multiple occasions, the employer threatened and interrogated employees in relation to two Board-conducted elections held one-week apart in its paint and assembly departments. The Board held that an administrative law judge correctly found such conduct to be in violation of Section 8(a)(1). Additionally, the employer permanently laid off 13 employees shortly after the elections in order to prevent the unionization of its workforce. Again, the Board held that the ALJ correctly found such conduct to be in violation of Section 8(a)(3).

Severance agreements. With respect to the laid off employees, the Board concluded that severance agreements signed by 11 of the 13 laid off employees did not prevent it from fully remedying the employer’s unlawful discrimination against them. By their terms, the settlement agreements provided a payment for each employee ranging from four to eight weeks pay (depending on seniority). The employer contended that the employees who signed the agreements waived their right to pursue any Board charges based on their discharges.

The Board concluded that in evaluating the severance agreements, the ALJ correctly applied the criteria in Independent Stave. The law judge noted that the employees’ union had not agreed to be bound by the severance agreements; the General Counsel contested the validity of those agreements; the agreements were executed in an atmosphere of serious, unremedied unfair labor practices; the agreements left unremedied many of the employer’s unlawful actions; and the agreements failed to provide for a remedial notice to the plant’s other employees and for reinstatement.

Moreover, it is well-established that the Board will not uphold a severance agreement that “was not a bona fide offer of settlement, but was extended as part of a broader scheme to eliminate union supporters.” The severance agreements in this case were part and parcel of the employer’s effort, through plantwide threats and a mass layoff, to prevent any of its production employees from winning union representation. Accordingly, the Board concluded that it would not effectuate the purposes and policies of the NLRA to accept those severance agreements.

Evidence of CBA. In a footnote discussion, the Board denied the employer’s motion to reopen the record in order to submit into evidence a collective bargaining agreement reached with the union for the employer’s paint unit after the hearing closed. The employer argued that the CBA was relevant as to the propriety of the ALJ’s recommended Gissel bargaining order. The Board concluded that the proffered agreement was not relevant to that remedial issue, because it traditionally evaluates the need for a bargaining order based on the situation at the time the unfair labor practices were committed. Moreover, the Board noted that even if it considered the CBA, it would not affect the conclusion that a remedial bargaining order for the assembly department was warranted. A CBA reached in another unit did not minimize or dispel the substantial unremedied hallmark violations, including numerous threats and permanent layoffs.

Partial dissent. Member Kaplan argued that the Board should reverse the ALJ’s finding that the severance agreement executed by 11 of the 13 laid off employees were unenforceable and did not bar litigation of the merits that their permanent layoffs were unlawful. In his view, that finding represented an erroneous application of extant law and also deprived the employer of due process by relying on factors not alleged by the General Counsel. According to Kaplan, the ALJ’s analysis went off the rails in his consideration of the second and fourth factors of Independent Stave. As to the fourth factor, the ALJ found that the severance agreements were executed in an atmosphere of unremedied unfair labor practices, even though the employer had no history of violating the Act. With regard to the second factor, the dissent also disagreed with the ALJ’s findings that the settlement agreements were unreasonable because they left many complaint violations unremedied.

In addition to the Independent Stave analysis, Kaplan argued that the ALJ erred in finding that provisions in the severance agreements prohibiting disclosure of confidential information, and prohibiting negative comments about the company or its employees were unlawful and rendered the agreements unenforceable. He argued that reliance on these provisions violated the employer’s due process rights because they were facially legal and the General Counsel did not rely on those provisions, so that the employer had no notice that it should have proved the legality or enforceability of each provision.

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