Law360 Expert Analysis · Severance

NY Severance Rules Persist Despite McLaren Macomb Threat

Even if the National Labor Relations Board overrules McLaren Macomb, New York law still limits what a severance agreement can make an employee keep quiet about.

Matthew L. Berman · October 13, 2026 · First published in Law360

This article first appeared in Law360’s Expert Analysis section on October 13, 2026. The text below is the article as published. Read it on Law360.

Practitioners have been speculating that federal law may be walked back concerning severance agreements containing confidentiality and nondisparagement clauses for nonsupervisory employees, due to political changes in the constitution of the National Labor Relations Board.

But if that occurs, New York’s robust regulation of severance agreements will not be displaced, and New York counsel cannot assume that they will have the unfettered ability to offer nonsupervisory employees severance agreements containing those provisions.

Under federal law, certain severance agreements — including merely proffering such agreements — for nonsupervisory workers are unlawful where they limit workers’ ability to speak about the terms and conditions of their employment, including about the circumstances under which their employment ended. This is because the rights of nonsupervisory workers are governed by the National Labor Relations Act and adjudicated by the NLRB. The leading case on this issue is McLaren Macomb, decided by the NLRB in 2023.

On Aug. 7, the board regained a Republican majority when the U.S. Senate confirmed Republican member James Macy and Democratic member David Prouty.¹ With James Murphy, a Republican, as the board chair, and Republican incumbent Scott Mayer, Republicans now outnumber Democrats 3-to-1.

On Aug. 26, general counsel Crystal Carey issued a memorandum that identified McLaren Macomb as one of the seven precedents from President Joe Biden’s administration that she asked the board to overrule.²

So the question that employers are now asking is this: Can broad confidentiality and nondisparagement terms once again be included in separation agreements for nonsupervisory workers?

At least in New York, this question can’t be answered only through what happens at the board, because New York state law has independent restrictions on severance agreements, so changes at the board will not remove the state-level restrictions governing severance agreements.

What McLaren Macomb Held and Where It Stands

In NLRB v. McLaren Macomb in 2024, the U.S. Court of Appeals for the Sixth Circuit granted the board’s petition to enforce an order finding that a hospital violated the NLRA by terminating employees without bargaining with their union and by dealing directly with those employees, providing them with a severance agreement containing confidentiality and nondisclosure clauses.³

The board’s decision in this case had overturned its own precedent in two prior cases, which had allowed employers to use severance agreements that limited workers’ ability to discuss the terms and conditions of their employment, and their separation from that employment.

In the two cases from 2020, Baylor University Medical Center and International Game Technology PLC, the board held that including confidentiality and nondisclosure provisions in a severance agreement is lawful, provided that the agreement isn’t proffered “under circumstances that would reasonably tend to interfere with the separating employees’ exercise of their own Section 7 rights or those of their coworkers.”

The board held in McLaren Macomb that Baylor and IGT took a severely constricted view of Section 7 rights that was inconsistent with the “wide protection afforded employees” under the act and overruled them.

According to the board, with one dissent, Baylor and IGT had reversed “long-settled precedent,” holding that unlawful provisions in severance agreements “have a reasonable tendency to interfere with, restrain, or coerce the exercise of employee rights under Section 7 of the Act.”

In other words, McLaren Macomb created — or arguably restored — an environment where severance agreements that restrict workers’ Section 7 rights are unlawful, even without any additional “unlawful coercive circumstances,” as had been required under Baylor and IGT.

The board’s decision means it is no longer safe, if it ever was, for employers to assume that they can lawfully offer employees severance agreements containing such clauses.

While McLaren Macomb is still board law until the board overrules it, it may be vulnerable to unwinding as the political winds have shifted, and the board now has a Republican majority. The Sixth Circuit, the only court of appeals to review McLaren Macomb, enforced the board’s order under the old standard and declined to decide whether the board was right to abandon it.

Recent Calls to Overturn It

Before Carey issued the memo asking the board to overrule McLaren Macomb, her office filed a legal brief paving the way for such a ruling. In Valley Radiology PA, the general counsel’s office filed an answering brief asking the board to overrule McLaren Macomb.

Carey argued for a standard under which a provision is unlawful only where “severance agreements, or their proffer … contain an explicit waiver of Section 7 rights that is not narrowly tailored,” including explicit employee waivers of the right to assist other employees with their claims before the board or to file future claims.

The general counsel’s office also requested that the board overturn McLaren Macomb and other cases in which the board had treated broadly worded or ambiguous provisions as explicit waivers of Section 7 rights.⁴

It argued, in the alternative, that the board should restore the precedential power of Baylor and IGT. While the timing of any decision is unknown, the votes are there, and the board may rule as the general counsel’s office has requested.

Implications of the Potential Change

Even if Carey obtains her desired result, the impact on New York employers would be limited where issues of discrimination are in play. Moreover, New York law reaches company executives that McLaren Macomb never did, because New York already imposes its own restrictions on employers’ use of severance agreements containing confidentiality and nondisclosure provisions.

Specifically, New York General Obligations Law Section 5-336 will still attach conditions to these provisions where the underlying facts of the claims released in the agreement involve discrimination, harassment or retaliation.

The confidentiality of the underlying facts is only allowed if it is the employee’s preference, memorialized in a signed agreement, in plain English, which the employee has up to 21 days to consider and seven days to revoke. In practice, employers are often unwilling to offer severance consideration unless the employee also executes a preference agreement.

Under Section 5-336(3), a release is unenforceable if the agreement requires liquidated damages for breach of a nondisclosure or nondisparagement clause; forfeits consideration for such a breach; or contains “any affirmative statement, assertion, or disclaimer by the complainant that the complainant was not in fact subject to unlawful discrimination.” This last provision is commonly seen as boilerplate text in severance agreement templates.

If these conditions are met, GOL Section 5-336(1)(c) allows confidentiality provisions if the employee is not restricted from “(i) initiating, testifying, assisting, complying with a subpoena from, or participating in any manner with an investigation conducted by the appropriate local, state, or federal agency; or (ii) filing or disclosing any facts necessary to receive unemployment insurance, Medicaid, or other public benefits to which the complainant is entitled.”

New York’s statutes provide broad coverage for all employees, including executives, though only where discrimination, harassment or retaliation is involved, while the NLRA only covers nonsupervisory, nonmanagerial employees.

And there’s an open question about whether Sections 5-336(1)(a) and (3) reach severance offered by an employer before any legal claim is advanced by an employee. The argument that the former applies is this: Section 5-336(1) reaches “any settlement, agreement or other resolution of any claim.” There is no requirement that the claim already be filed, asserted, pending or commenced.

Further, the statute says “complainant,” not “plaintiff.” And the legislature knew how to write a statute that applies only to filed claims — it did so when it enacted Civil Practice Law and Rules Section 5003-b, which was intended to ensure that confidentiality clauses in settlement agreements are there solely because they are the plaintiff’s choice, and to protect the plaintiff from being coerced into silence. The statute uses the term “plaintiff” and describes litigation vehicles.

Subdivision 2 of GOL Section 5-336 certainly reaches a predispute agreement, and it voids a future claim nondisclosure provision in any agreement with an employee, potential employee or independent contractor entered into on or after Jan. 1, 2020, unless it carries a notice that it does not prohibit the complainant from speaking with law enforcement, the U.S. Equal Employment Opportunity Commission, the state division of human rights, the attorney general, a local commission on human rights or an attorney retained by the employee, collectively the six channels.

Subdivision 3 may reach a predispute agreement. It is keyed to a release, which is what a severance agreement invariably contains, but whether a release alone is enough to trigger it is unclear.

The argument that Subdivisions (1)(a) and (3) don’t apply is that both speak of resolving a claim brought by a complainant, and Section 5-336 was enacted alongside CPLR Section 5003-b in a package of legislation enacted in connection with the April 2018 state budget, which aimed to regulate how harassment claims are settled. Reading it to govern every severance agreement that touches a factual situation involving discrimination sweeps in agreements that no one thought it covered.

The question is unresolved and thinly litigated. The one notable federal decision is Hadzijic v. Art Food LLC, which was based upon a mediation term sheet settling a pending federal lawsuit that called for a separate nondisclosure agreement to be signed later.⁵

In October 2025, the U.S. District Court for the Southern District of New York held in Hadzijic that including, or agreeing to include, a confidentiality obligation in a settlement agreement triggers GOL Section 5-336, and thus requires the provision of a 21-day waiting period and a seven-day revocation period before the agreement can become effective.

If, as Hadzijic holds, the confidentiality term is what triggers the statute, nothing should turn on whether a complaint has been filed yet. A severance agreement offered to someone who has made even an internal complaint would be within the statute’s ambit. Therefore, an employer relying on a narrower reading is taking a risk.

Once a discrimination lawsuit is filed, CPLR Section 5003-b imposes the same preference regime, but its 21-day consideration period is mandatory and, unlike Section 5-336’s, cannot be shortened.

Similarly, practitioners should be aware that the federal Speak Out Act makes nondisclosure and nondisparagement clauses unenforceable in agreements executed before a dispute arises involving sexual harassment or sexual assault claims.⁶

Takeaways

If the board overrules McLaren Macomb, employers will be tempted to include confidentiality and nondisclosure provisions in severance agreements for rank-and-file employees. For executives, whose severance agreements were never implicated by McLaren Macomb, the constraint on confidentiality and nondisparagement has always been New York state law, not the NLRA.

However, employers should still be wary of the aforementioned federal and state laws that restrict the use of confidentiality and nondisclosure clauses in severance agreements for ordinary workers, especially where they would interfere with claims involving discrimination, sexual harassment or sexual assault.

While New York practitioners should certainly ponder how to best structure severance agreements, there are some clear takeaways.

The most practical rule for severance agreements arises from GOL Section 5-336. Any agreement entered into on or after Jan. 1, 2020, that “prevents the disclosure of factual information related to any future claim of discrimination is void,” unless it says the employee can still speak through the six channels. That rule applies by its terms even before any legal claim exists.

Second, keep any Section 7 restriction language narrowly tailored, rather than reflexively restoring pre-2023 language into severance agreement templates. And keep express carveouts for filing board charges and assisting co-workers — even the general counsel’s proposed standard treats waivers of those rights as unlawful.

Additionally, limit the coverage of confidentiality and nondisclosure clauses to safer subject matter, such as trade secrets and terms of the settlement agreement.

Remove provisions that provide for liquidated damages and clawback remedies tied to nondisclosure or nondisparagement breaches in agreements that release claims for discrimination, harassment or retaliation, and remove boilerplate assertions requiring the employee to acknowledge that they weren’t discriminated against.

Further, ensure that properly drafted preference agreements are executed contemporaneously with any severance agreement.

Finally, include a provision expressly allowing the employee to engage in activities protected by Section 5-336(1)(c), including filing agency charges, responding to subpoenas and testifying.

Conclusion

If McLaren Macomb is overruled, New York practitioners cannot assume that they will have free rein to offer employees severance agreements containing confidentiality and nondisclosure provisions. The Speak Out Act, GOL Section 5-336 and CPLR Section 5003-b will still be significant obstacles to overcome.

Counsel should think carefully about whether it’s actually in their client’s interest to include aggressively drafted clauses that restrict what employees can say after their departures, especially if they want to avoid explaining to clients why, after paying severance consideration, they haven’t obtained the peace they thought they bargained for.

Matthew L. Berman is a partner at Valli Kane & Vagnini LLP. The opinions expressed are those of the author and do not necessarily reflect the views of his employer, its clients, or Portfolio Media Inc. (Law360’s publisher). This article is general information, not legal advice, and it does not create an attorney-client relationship. Attorney Advertising. Prior results do not guarantee a similar outcome.

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