What’s Vital About Severance Benefits Post-NLRB Ruling

Until recently, employers were in a position to give laid-off employees a choice: severance or the freedom to talk about your experience. The National Labor Relations Board (NLRB) has now reversed the decision made in 2020, ruling that employers can no longer stipulate that departing employees keep the details of their severance package confidential in order for them to receive the benefit, nor can they stipulate that employees not speak disparagingly about the company. 

In this blog post, we will explore why it’s now even more important for employers to provide comprehensive severance packages to exiting employees as a result of this ruling, and just what “comprehensive” means in this context.

The Problem with Non-Disparagement Clauses

The National Labor Relations Act (NLRA) gives employees the right to engage in concerted activity for the purpose of collective bargaining or mutual aid or protection. This includes the right to criticize or complain about working conditions, wages, or other employment-related issues. When employers require employees to sign non-disparagement clauses, they restrict this right by preventing employees from speaking out about their experiences at the company.

Non-disparagement clauses can also have a negative effect on other employees who may want to speak out about similar issues. When employees see their colleagues being silenced, they may feel less comfortable speaking up themselves, even if they have legitimate concerns. Not only does this prevent an employer from making positive, corrective changes, the result can also be damaging to both engagement and retention.

How the New NLRB Ruling Affects Employers

First, the ruling means that employers will need to revise their severance agreements to remove non-disparagement clauses. This may seem like a small change, but it has important implications for the way employers handle employee departures.

In the past, employers could use non-disparagement clauses as a way to manage the narrative around an employee’s departure. They could require departing employees to sign an agreement that prevented them from making negative comments about the company or its employees, and then use this agreement to influence what was said about the departure, including severance benefits.

With the ruling in place, a comprehensive severance package helps protect not only departing employees, but employers as well. Below, we explain how. 

How Comprehensive Severance Packages Protect Employees

A comprehensive severance package offers impacted employees benefits that help them move on from the layoff event by taking care of their immediate needs, and potentially covering them for a few months or more. These offerings might include additional compensation, such as a bonus or extended health benefits, as well as providing more support during the transition period. For example, employers may offer outplacement services to help employees find a new job, or provide additional training and development opportunities to help them build new skills. Some employers also allow departing employees to keep their computers and other devices.

How Comprehensive Severance Packages Protect Employers

Providing a comprehensive severance package can have benefits for employers as well as departing employees. When employees leave on good terms, they are more likely to speak positively about the company and recommend it to others. This can help improve the company’s reputation and make it easier to attract top talent in the future. Remaining employees are also likely to feel better about how their colleague was treated upon exiting the company, which can help with retention.

In addition, providing a generous severance package can help mitigate the risk of legal action. When employees feel that they have been treated fairly and respectfully, they are less likely to sue the company for wrongful termination or other legal issues. 

Consequences of Poor Severance Packages 

Many impacted employees share details of their layoffs not only with their immediate networks, but also on sites like LinkedIn that allow many others to view the post. As a result, negative conversations about the employer—whether truthful or misinformed—can spread quickly. In addition, both these employees and those who survived the layoffs may review the company on sites like Glassdoor about their employment experience, the layoff, and what benefits were offered upon exiting.

Any negative talk about the employer can result in difficulty attracting talent. It can also impact the remaining employees, who likely already have a lowered morale due to stress surrounding the layoff. It can also affect the brand and how its customer base views the organization, potentially causing a dip in business when it can least afford it. 

Offering Comprehensive Severance Packages Is the Right Thing to Do

Of course, providing a comprehensive severance package is not just about mitigating risk or managing employee departures. It is also the right thing to do from a moral and ethical perspective. When employees have dedicated their time and energy to a company, they deserve to be treated with respect and dignity, even when they are leaving.

Related Posts and Resources

Severance Guide

How to Calculate Severance Pay

Negotiating Severance for Employers

Employee Termination Checklist

Layoff Planning Quick Reference Guide

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Robyn Kern

Robyn Kern is a seasoned business writer who has written in the HR, education, technology, and nonprofit spaces. She writes about topics including outplacement, layoffs, career development, internal mobility, candidate experience, succession planning, talent acquisition, and more, with the goal of surfacing workforce trends and educating the HR community on these key topics. Her work has been featured on hrforhr.org and trainingindustry.com.