NLRB Considers Revision of Severance Decision

March 20, 2023

The National Labor Relations Board (NLRB) recently restricted the use of confidentiality and non-disparagement clauses within severance agreements.



In McLaren Macomb, et al., a Michigan hospital furloughed 11 union employees deemed “nonessential” after the COVID-19 pandemic forced the hospital to cease performing elective and outpatient surgeries. In June 2020, the hospital made the 11 furloughs permanent, and presented the employees with severance agreements, containing confidentiality and non-disparagement clauses.

The Biden-era NLRB has deemed the confidentiality and non-disparagement clauses in McLaren to be unlawful.


Under the Trump-era NLRB, such clauses would likely have been held as lawful, provided the decisions in Baylor University Medical Center and IGT d/b/a International Game Technology. It should be noted that the aforementioned decisions reversed long-settled precedent and replaced it with what the NLRB in McLaren refers to as “. . . a test that fails to recognize that unlawful provisions in a severance agreement proffered to employees have a reasonable tendency to interfere with, restrain, or coerce the exercise of employment rights under Section 7 of the Act.”


The NLRB’s decision in McLaren has explicitly overruled Baylor and IGT. In its decision it used the reinstated test to find the confidentiality and non-disparagement clauses at issue in McLaren to be unlawful.


The provisions at issue in McLaren would bar the hospital employees from providing information to the NLRB regarding the hospital’s interference with employees’ statutory rights. It would also preclude an employee from communicating with a union or board of directors, and prevent an employee from assisting another employee with issues concerning their employer.

It is likely that McLaren will be appealed, and even possible that this case arrives before the Supreme Court in due time.


If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

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July 14, 2025
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Remote Workers and the WARN Act

July 9, 2025
Background: The e-commerce website Zulily liquidated in May 2023 and laid off its entire workforce by the end of 2023. While in-person workers at Zulily’s Seattle headquarters and fulfillment centers in Ohio and Nevada received 60 days’ notice or pay under the Worker Adjustment and Retraining Notification (WARN) Act, remote employees were not given any notice or pay. Four remote workers—two based in Washington and two based in Ohio—filed a class action lawsuit claiming that this was a violation of the WARN Act and state wage laws. The workers argued that because their roles were assigned to corporate offices or fulfillment centers, they should have been considered “affected employees” under the WARN Act when those sites closed. In a decision that could signal a significant shift in how the WARN Act applies to remote workers, the federal judge refused to dismiss the workers’ claims.  Key Legal Questions 1. Do Remote Workers Qualify for WARN Act Protections? The core of the dispute centers on whether remote workers can be considered part of a “single site of employment” that closed or experienced a mass layoff—terms that define whether the WARN Act’s notice requirements kick in. 2. Are WARN Act Damages Considered “Wages”? The Plaintiffs also brought state wage claims, arguing that the pay they would have received with proper WARN Act notice should be considered unpaid “wages” under Washington law and Ohio law. What the Court Decided: Judge Kymberly K. Evanson rejected the company’s motion to dismiss the case. Finding that Zulily’s argument that remote employees do not work at a single site with 50 or more workers and thus aren’t covered, was a factual question not suitable for early dismissal. Prior cases support the idea that even home-based employees may be “affected employees” if tied to a central worksite that shuts down. The court also found that if the WARN Act applies, then the Plaintiffs could plausibly claim that Zulily withheld “wages” owed under Washington and Ohio laws —opening the door to potential double damages and attorney fees. The Plaintiffs haven’t won their case; the court’s refusal to dismiss the claims allows them to move forward to discovery and potentially class certification. If they succeed, the case could set a precedent requiring companies to treat remote employees as part of larger employment sites for WARN Act purposes. With remote work here to stay, courts—and employers—will need to grapple with what "site of employment" really means in the 21st-century workforce. For employers, the message is clear: remote doesn't mean exempt. As the legal framework catches up with modern work arrangements, companies must tread carefully when making large-scale employment decisions. If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.