NLRB Decision Places Limits on Non-Disparagement Provisions in Severance Agreements

Authored by Katherine M. Flett with assistance from Kristina M. Stevenson, contributor

Non-disparagement clauses have historically been a common element of severance agreements and aim to protect an employer’s name from negative commentary by a former employee to others. The severance agreement is a contract that outlines the compensation and benefits an employee will receive in exchange for the release of any and all employee claims against the employer arising out of the employment relationship.

Confidentiality clauses limiting an employee’s right to disclose the terms of a severance agreement have also been a common element of severance agreements.

A recent National Labor Relations Board (NLRB) decision has placed a warning sign on all employment severance agreements. Retroactively, the NLRB’s decision in McLaren Macomb may invalidate non-disparagement and confidentiality clauses in severance agreements both before and after February 21, 2023. Generally, employers are now prohibited from proffering severance agreements that require non-supervisory employees to broadly waive their rights under Section 7 of the National Labor Relations Act (NLRA) in exchange for severance benefits.

Under the NLRA, Section 7 and Section 8(a)(1) work together to protect an employee’s right to unionize, assist labor organizations, and engage in concerted activities. Employers may not interfere with the Section 7 rights of their employees. To assist in understanding how non-disparagement and confidentiality clauses interfere with Section 7 rights, NLRB General Counsel Jennifer Abruzzo issued a memorandum providing guidance for the applicability of the McLaren Macomb decision.

Five Major Takeaways from the McLaren Macomb Decision Continue reading »

Contracts: The Basics

Understanding contracts is essential for a small business. Contracts are the basic building block of our economy and the legal principles of contract formation and enforcement go back centuries but are still in effect today.

Contracts require a “meeting of the minds” between the contracting parties and are enforceable in our courts. Contracts need to be clear and unambiguous and should be in writing and signed by the parties. In certain cases, oral contracts are enforceable but without a writing the terms are very hard to prove. For this reason, business contracts should always be in writing. The basic principle of contract interpretation by the courts is to determine what is the intention of the parties as determined by the four corners of the written document. Deals may be sealed with a handshake but fade away without a written document.

Contracts also require consideration to be enforceable. Consideration means that the parties exchange mutual promises or that one party agrees to provide a benefit to the other party or agrees to accept a detriment in consideration for the contract. A promise to make a gift is not enforceable because the receiving party has made no promise, payment or other consideration to the gifting party.

Under the Uniform Electronic Transactions Act (UETA), contracts can be signed electronically by using systems such as DocuSign as long as the parties intend to sign and do business electronically and keep a record that can be stored and reproduced as a copy. All states have adopted the UETA, including Missouri (codified at Section 432.200 RS MO 2003). Electronic contracts are just as enforceable as traditional signed contracts. Thus, it is important to note that the same basic principles of contract formation, interpretation and rules of enforcement apply to contracts in electronic or digital form. Continue reading »

Illinois Passes Expansive Paid Leave Legislation: The Paid Leave for All Workers Act

Authored by Ruth Binger with assistance from Sarah L. Ayers

One of the most expansive paid leave laws in the nation has passed in Illinois. When the “Paid Leave for All Workers Act” goes into effect on January 1, 2024, Illinois will be one of only a few states, including Maine and Nevada, that require employers to offer paid leave for any reason or no reason at all.

Who Does the New Law Apply To?

The Paid Leave for All Workers Act applies to all individuals and public and private entities that employ at least one person in the state of Illinois. However, federal government employers, school districts organized under the Illinois school code, park districts organized under the Illinois school code, and employers who have already started to allocate sick leave under the Chicago or Cook County Ordinance are exempt.

“Employees” are broadly defined as “[a]ny individual permitted to work by an employer in an occupation.” The new law applies to in-state employees and remote employees based in Illinois who work 40 or more hours in Illinois within a 12-month period.

Under the Paid Leave for All Workers Act, domestic workers are considered employees, but the following workers are not:

• Independent contractors,
• Workers who meet the definition of employee under the Federal Railroad Unemployment Insurance Act or Railway Labor Act,
• College or university students who work part-time at the institution they attend, and
• Short-term employees who work for an “institution of higher learning” for less than two consecutive calendar quarters and do not have an expectation to be rehired.

Another important note is that individual employees cannot waive their rights under the Paid Leave for All Workers Act. However, bargaining unit employees can waive the right in a “bona fide collective bargaining agreement” if it is explicitly stated in “clear and unambiguous terms” within the agreement. Employers who have union employees are required to implement the Paid Leave for All Workers Act, even if it is inconsistent with the terms of the collective bargaining agreement, if the bargaining agreement is not set to expire for several years.

What Does the New Law Require? Continue reading »

What Businesses Should Keep In Mind When Terminating an Employee

Ruth Binger was asked a few employment law questions by Ron Ameln, editor of St. Louis Small Business Monthly. Click here to see the first question about non-compete agreements and Ruth’s response. 

Firing an employee is always tricky. What are some things owners need to keep in mind if they let an employee go?

It is always hard to fire an employee. Employees strike back in a myriad of ways, some fair and some not so fair, such as filing a discrimination claim with the Missouri Human Rights Commission or the EEOC, complaining bitterly on the Glassdoor website, or, absent a non-compete, going to work for your competition or soliciting your employees and customers.

Positive actions include offering a severance agreement which includes a non-compete. Some employers make introductions to other employers where the fit might be better. This works well if the employee is not being let go because of performance but because of a lack of work or occupying the wrong seat on the bus. You could also put the employee on paid or unpaid leave for 3-6 months until the employee finds a job. It is easier to find a job if you have a job.

How important is it to have the proper documentation before firing an employee? Continue reading »

What Businesses Should Keep In Mind About Non-Compete Agreements

Ruth Binger was asked a few employment law questions by Ron Ameln, editor of St. Louis Small Business Monthly. Here is the first question with her response. Click here to see Questions 2 & 3 about things to keep in mind when terminating an employee.

With the tight labor market, business owners are doing everything they can to keep employees. Some are looking at non-compete agreements. Others hope their current agreements will help keep employees in the current environment. What should businesses keep in mind with these agreements?

Non-compete agreements are negative guardrail enforcement to protect your business. To enforce a non-compete, you must be able to prove that the business has a protectible interest in its trade secrets and customer relations and the covenants are reasonable. The key is to have your employees sign non-compete agreements on the first day of employment. If you require that the employees sign the agreement post-hiring, you will have issues with morale (employee may leave) and enforceability. To ensure enforceability of post-hiring agreements, you should consider providing additional consideration, such as bonus, raises, promotions, or benefits.  Inception of employment is consideration for the on-hire non-compete.

The term “non-compete” is used to describe three types of restrictive covenants, and people use the term interchangeably. Continue reading »

Missouri’s New Marijuana Amendment: Workplace Testing and Employees “Under the Influence”

Missouri’s newly approved constitutional Amendment 3 regarding marijuana use will go into effect on December 8, 2022.  With a total of 49 pages, the Amendment 3 has two sections: revised Section 1 (former Amendment 2), which focuses on medicinal use, and Section 2, which focuses on marijuana recreational use.

Employers have long had Drug-Free Workplace policies that test employees for various illegal drugs.  Common tests are pre-employment, random, reasonable suspicion, and fitness for duty/return to work/follow up after rehab or last chance.

The original Amendment 2 regarding medicinal use was passed in 2018.  Employers responded to this amendment in several ways including choosing to keep their policies the same but providing reasonable accommodation under the disability statutes or to simply quit testing for THC altogether except for reasonable suspicion.

Now, employers will have to go back to the drawing board.

Section 1: Medicinal Use of Marijuana

Section 1 of Amendment 3 revises the original Amendment 2 in its entirety. One of the revisions/additions includes adding a nondiscrimination in employment section. It prohibits employers from discriminating against “medicinal cardholders” based on off-duty use unless the person was “under the influence of medical marijuana” at or during work. Further, it specifically prevents employers from relying solely on a positive THC test result to terminate a medicinal cardholder unless the person used, possessed, or was “under the influence” of medical marijuana at or during work.

There are exceptions to the “under the influence test” for medicinal cards for the following situations:

1. If the employer would lose a monetary or licensing related benefit under federal law,
2. If the employee has a job where “legal use of a lawful marijuana product affects in any manner a person’s ability to perform job-related employment responsibilities, or
3. If it conflicts with a bona fide occupational qualification that is reasonably related to a person’s employment.

This exception protection does not appear to apply to “recreational” users who do not have a “medicinal card.”

There is no readily available test to scientifically confirm whether someone is “under the influence of marijuana” nor what the threshold of impairment is under BAC for alcohol. How long a person will test for marijuana depends on a multitude of factors but is not limited to: Continue reading »

Updated EEO “Know Your Rights” Poster Now Available

On October 22, 2022, the Equal Employment Opportunity Commission issued an updated EEO poster, a copy of which is attached to this blog post. This is to replace a previous EEO poster and addendum issued by the EEOC in 2019.

In many cases, employers have posted what is known as a 6-way poster, which sets forth an employee’s rights under various federal laws, including Title VII and the Americans with Disabilities Act. You may wish to acquire an updated 6-way poster, or you can simply post the October 2022 poster next to the 6-way poster, or over the section on Equal Employment Opportunity on existing 6-way posters.

Who is Required to Post this Notice?

Any employer with more than 15 employees is required to post the updated notice.

When Should I Put This Up? Continue reading »

Missouri Employers and Abortions as Healthcare: Don’t Ask, Don’t Tell

Authored by Ruth Binger with assistance from Sarah L. Ayers, contributor

The recent U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization triggered a ban on abortion in Missouri and several states. In 2019, Missouri passed the “The Right to Life of the Unborn Child Act,” an anti-abortion bill which included a trigger ban on abortions. In the event Roe v. Wade was ever overturned, the Governor or Attorney General was to issue a statement implementing the ban. Missouri Attorney General Eric Schmitt issued a statement proclaiming the trigger law in effect as of Friday, June 24, 2022, at 9 a.m. following the Dobbs decision.

A variety of new legal questions related to abortion and healthcare have arisen since the decision was announced and states, such as Missouri, have enacted trigger bans. One example of the confusion involves life-saving abortions in cases of a medical emergency. Under a new regulation issued by the Biden administration, a life-saving abortion in cases of a medical emergency is a federally protected procedure. Leaders in several states have challenged the regulation.

Another issue lies with pre-Roe bans in states which outlaw abortion and whose legality today is still questionable even with the reversal of Roe. Many states with pre-Roe bans are in the process of putting updated laws on the books that either re-affirm restricting abortion or protect abortion. Kansas voters recently rejected a proposed state constitutional amendment stating there is no right to abortion within the state. Other questions raised include: How will the laws be enforced? Who can be charged with conspiracy in states under a ban (such as Missouri)? Can a state with an abortion ban exclude a fetus from being considered a person in other areas of the law? Continue reading »

Sexual Harassment Policies for the Trucking Industry: Best Practices

The current over-the-road driver shortage has created increasing pressures for trucking companies of all sizes. As a result, some trucking companies may be reluctant to terminate – or to not hire – drivers who have been accused of sexual harassment. But this reluctance may not be a good idea in light of Title VII.

Title VII of the Civil Rights Act of 1964 prohibits sexual harassment and retaliation against any employee who complains of sexual harassment to an employer. In addition, Title VII complaints can be filed in any judicial district where: the harassment was alleged to have been committed; the employment records relevant to the harassment claim are maintained and administered; the complainant worked; or if the employer cannot be “found” in one of the first three districts, the complaint can be filed in the district of the employer’s principal place of business.

Continue reading »

Clicking Towards Disaster: The Cost of ADA Non-Compliant Websites

Click here for July 2023 Update: Clicking Towards Disaster: The Cost of ADA Non-Compliant Websites