Employment Law Update February 2023
February may be the shortest month, but it packed plenty of significant developments in the world of employment law, including a major worker-friendly change in severance agreements, another massive employment discrimination punitive damages award against a household-name business, and another difficult result for our hometown Philadelphia Eagles. Get the latest details below.
NLRB Limits Inclusion of Overly Broad Non-Disparagement and Confidentiality Clauses in Severance Agreements for Employees
The National Labor Relations Board (NLRB) has issued a decision that restricts the use of non-disparagement and confidentiality clauses in severance agreements, which could have ripple effects for employers nationwide. The NLRB held that employers cannot implement severance agreements that include overly broad non-disparagement or confidentiality provisions that restrict the employees’ exercise of their rights under Section 7 of the National Labor Relations Act (NLRA). The Board reasoned that an employer’s offer of a severance agreement with unlawfully broad provisions is itself an attempt to deter employees from exercising their statutory rights. The ruling applies to workers who have Section 7 rights, regardless of whether they are unionized. The decision overrules the Trump administration’s more employer-friendly standard. As a result of the decision, employers will potentially need to reexamine their severance agreements with an eye towards compliance with the new NLRA standard.
The case is McLaren Macomb, 372 NLRB No. 58 (2023).
Another Enormous Punitive Damages Award in Employment Discrimination Action
In another in a series of recent enormous verdicts across the U.S. in cases of employment discrimination, a Texas federal judge has ordered FedEx to pay $366 million plus interest to ex-salesperson Jennifer Harris, who was allegedly fired for complaining about racial discrimination. The award included $365 million in punitive damages in addition to past and future compensatory damages awarded by a jury in October. In her May 2021 complaint, Harris asserted that she had been a successful sales representative at the company for more than ten years and had flourished in her role. However, she claimed that a manager requested she take a demotion, which she perceived as discriminatory. This request led to what she deemed a fraudulent investigation into her accusations, additional disciplinary action, and ultimately her termination. FedEx had asked for the jury’s decision to be erased, arguing that it had made good-faith efforts to comply with anti-retaliation laws. FedEx has filed a notice of appeal. The case serves as a powerful reminder of the severe consequences that a company can face if it is found to have acted recklessly in violation of an employee’s civil rights.
The case is Harris v. FedEx, case number 4:21-cv-01651, in the U.S. District Court for the Southern District of Texas.
Commonwealth Court holds that Philadelphia Eagles cannot evade disability payments for Former Linebacker
The Philadelphia Eagles have had a tough month. In addition to their difficult loss in the Super Bowl, the Eagles were unsuccessful in a recent legal challenge regarding disability benefits for a former player. The team must pay disability benefits to Emmanuel Acho, a former linebacker who broke his thumb in two separate incidents in 2015 and was unable to play at a professional level since, a Pennsylvania appellate court has ruled. The court ordered the team to pay total disability benefits from August through November 2015, and partial benefits from November 2015 through September 2019. The Eagles argued that other teams’ disinterest in Acho was not necessarily due to his injury, but the Commonwealth Court panel found that his success and ranking as a professional player was not meaningfully contested.
The case is Philadelphia Eagles Inc. v. Acho, case number 1060 CD 2021, in the Commonwealth Court of Pennsylvania.
Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment. Jeff also practices in commercial litigation as well as counsels business on commercial contract matters.