New Employment Law Updates – Like Music to Our Ears

Hopefully you know that things like “discrimination” and “retaliation” are generally frowned upon in the workplace (and, you know, everywhere else), but what about that Miley Cyrus guilty pleasure? Turns out that listening to the wrong music at work could get you in legal trouble (focusing on legal trouble here, not the kind of trouble you might run into for listening to Nickelback). Also featured on this week’s track: the Supreme Court’s recent ruling clarifying what constitutes a “salary”, and a cautionary tale involving non-competes. But first, let’s take it from the top and talk about the National Labor Relations Board’s recent decision invalidating most non-disparagement and confidentiality provisions in severance agreements. Sit back, relax, and enjoy some music puns.

NLRB Issues Major Ruling Invalidating Non-Disparagement and Confidentiality Provisions in Severance Agreements

The National Labor Relations Board (“NLRB”) is the federal agency responsible for enforcing the nation’s labor laws, and if you found yourself saying “why does the ‘NLRB’ sound familiar?” it’s probably because the agency recently made headlines by declaring that most confidentiality and non-disparagement clauses in separation agreements violate federal labor law. That sounds pretty intense, so let’s back up for a second.

The NLRB is governed by a five-person board, all of whom are appointed by the President, and so the board is almost always going to be a majority in favor of the current President’s party . . . which means you see a lot of pendulum swinging with labor laws when we elect a new President. Under President Biden, we’re seeing a lot of encores to Obama-era labor rules.

Going back to this recent decision – called McLaren Macomb – the current NLRB took aim at non-disparagement clauses and confidentiality provisions. These two provisions are commonly used in severance agreements, and are generally intended to prohibit an employee from disclosing the terms of their severance or bad mouthing their former employer. In McLaren Macomb, the NLRB ruled that such provisions violate employees’ rights under Section 7 of the National Labor Relations Act (“NLRA”), because they would have the effect of chilling an ex-employee’s “future cooperation with the [NLRB]’s investigation and litigation of unfair labor practices with regard to any matter arising under the NLRA.”

Does this mean it’s curtains for confidentiality and non-disparagement clauses in severance agreements? It depends! First, McLaren Macomb only applies to non-supervisory employees – so don’t remove those clauses for managers and executives. Second, “confidentiality” for purposes of this case is limited to the terms of the agreement, and does not impact trade secrets or other proprietary information. You can (and should) still keep those types of confidentiality provisions.

This decision is certainly going to be appealed or otherwise challenged, and so the story is far from over. For now, we know there’s definitely something happening here. What it is? Not exactly clear. But if you are including non-disparagement and confidentiality provisions in your severance agreements, you should probably stop, look around, and ask your legal counsel what’s going down.

The United States Supreme Court Clarifies What a “Salary” is for Purposes of the FLSA

Mo[re] money mo[re] problems. That’s what Helix Energy Solutions Group was probably thinking after the Supreme Court confirmed they owed overtime to a former employee who was making more than $200,000 a year. Last week the Supreme Court issued a ruling clarifying what a “salary” is under the Fair Labor Standards Act (“FLSA”). Under the FLSA, employees are generally labeled exempt or non-exempt: non-exempt workers are eligible for overtime, exempt workers are, well, exempt (see what they did there?). There are many ways an employee can qualify as exempt – and you should really speak with an attorney about what those are – but the analysis almost always involves the question of whether the employee was paid a salary or something else (hourly, daily, etc.). Enter Helix Energy Solutions Group, an oil and gas company that frequently paid certain employees a daily rate, sometimes as high as $1,341 per day. You probably know where this is going: one of these employees sued and claimed that, despite earning more than $200,000 in annual wages, he was entitled to overtime because he was paid a daily rate and not a weekly salary. And the Supreme Court agreed.

A 6-3 majority of the justices reasoned that a “salary” is a steady, predictable stream of pay that does not vary. The justices further noted that an employee is not salaried simply because they received bi-weekly paychecks that exceed the salary threshold level under the FLSA. Details matter people, and this case confirmed how rigid some of these statutes can be. So, whether you’re in the offshore oil rig business or not, make sure your exempt employees are actually exempt.

Is Your Non-Compete Assignable? – Lessons Learned from Recent Texas Ruling

Seamlessly transitioning from the offshore oil rig industry to Texas, a company just found out the hard way how important an “assignment clause” is. The Texas Twelfth Court of Appeals recently found that non-compete clauses of certain high-level executives were unenforceable by a purchasing entity because the employment agreements containing the non-competes lacked an assignment clause. In other words, without a clause clearly stating that the selling company was able to assign its rights and obligations, including employment agreements, to a potential buyer, the restrictive covenants in the employment agreement were no longer valid upon the sale of the company. That means if those high-level executives chose to not continue with the purchasing entity, they could likely quit and join a competitor. Lesson learned: that “boilerplate” language matters, and if you ever anticipate buying (or selling) a company, make sure the employment agreements have key terms like assignment clauses.

Offensive Music in the Workplace: Leave Your Notorious B.I.G. Mixtape at Home

Now for the hook . . . recent case law from the past couple of years has shown that discrimination claims don’t have to arise from words and actions, but can flow from something like vulgar music. A few lawsuits from Nevada provide interesting test cases into the viability of sexual harassment claims on the basis of inappropriate music. In one suit, a female employee complained that the music in her workplace had explicit references to women as “bitches” and other offensive language, ultimately driving her to quit.

Regardless of how these cases turn out, we’re going to recommend taking proactive measures and being mindful of any music blasting in common areas. The moral of the story? Find a good instrumental Spotify station and stick to it.

As always, if you’ve got questions, you know we’ve got answers.

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