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  • Writer's picturePaul F. Keneally

NLRB’s Views on Severance Agreements and Independent Contractor Definition Changes

In addition to its more noteworthy recent General Counsel proclamation that most non-compete agreements violate the National Labor Relations Act (“NLRA”) (see prior post - Non-Competes Soon To Be No More in New York?), the National Labor Relations Board (“NLRB”) recently found that certain common provisions of employer-provided severance agreements violate the NLRA. The NLRB has also recently released its latest view on when a worker should be classified as an independent contractor, not an employee.


Regarding severance agreements, the NLRB focused on non-disparagement clauses and clauses requiring that the employee keep the circumstances of his or her employment confidential. The NLRB noted that Section 7 of the NLRA specifically permits employees to speak freely about their employment and employer, such that even the employer’s mere offer of those clauses violates Section 8 of the NLRA by forcing the employee to choose between their Section 7 rights and the proposed severance compensation.


As to the employee/independent contractor test, the NLRB returned to the President Obama-era test, meaning potentially more employee and less independent contractor classifications, and likely more unions. No longer will the entrepreneurial opportunity for profit or loss be the “animating principle” of the test. Rather, that will again be one factor among the many traditional common law factors considering whether the worker is conducting an independent business. Particularly important is whether the company imposes restraints on that opportunity to be an independent contractor.


If you have any questions regarding this or any other Labor & Employment law topic, please call Paul F. Keneally at (585) 258-2882 or email pkeneally@underbergkessler.com.


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