44 | Weil, Gotshal & Manges LLP LITIGATION TRENDS 2024 | 45 T O C E M P A N T I I P C A P R O W C C O N T A C T I N T A P P P A T C C L S E C ■ Confidentiality provisions that prohibit employees from discussing the financial terms of severance are also permissible. ■ In the event an agreement contains an unlawful non-disparagement or confidentiality provision, the GC will seek to strike only the unlawful provision(s), leaving intact the rest of the agreement. ■ A savings clause or disclaimer will not necessarily cure overly broad provisions. Since McLaren applies to both unionized and non-unionized employees, any employers that use nondisparagement and confidentiality provisions in severance agreements with non-supervisory employees should carefully review those provisions to ensure compliance. Please refer to our previous articles for more detail on McLaren and our related guidance. GC’s Non-Compete Memorandum In May 2023, GC Abruzzo issued another memorandum expressing her view that non-compete agreements for nonsupervisory employees violate the NLRA, except in limited circumstances. According to the GC, certain noncompetes could reasonably be construed as denying such employees the ability to quit or change jobs by cutting off their access to other employment opportunities. That denial of access, in turn, chills employees from engaging in Section 7 activity. Notably, however, not all such noncompetes are necessarily unlawful under the terms of the guidance. Rather, GC Abruzzo indicated that noncompetes can be lawful in certain circumstances, including when the provision restricts only managerial or ownership interests in a competing business and in true independent contractor relationships. Additionally, non-competes may also be permissible when they are “narrowly tailored to special circumstances justifying the infringement on employee rights.” The full range of “special circumstances” that could qualify is not specifically enumerated in the guidance, but the memorandum does note that an employer’s desire to avoid competition from a former employee is insufficient. Given that the memorandum is not legally binding, no immediate action is necessarily required by employers. However, both union and non-union employers should review whether they use non-competes in agreements with non-supervisory employees. If they do, those employers should analyze the non-competes to determine whether they could be justified under the guidance. As always, employers should also be mindful of any binding state law governing non-competes in their respective jurisdictions. Joint Employer Standard In October 2023, the NLRB issued a now-vacated rule that would have triggered additional legal obligations for certain employers with alternative staffing arrangements, including those with franchisees and those that use staffing agencies or subcontractors. The new standard was poised to meaningfully expand the range of employers that could be considered “joint employers” of the same workers, a classification that comes with specific legal responsibilities. These could include an obligation to bargain with a union or abide by a collective bargaining agreement. The new rule was set to take effect on March 11, 2024, following a two-week stay amid a legal challenge by the U.S. Chamber of Commerce and a coalition of business groups. But on March 8, Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas vacated the rule and restored the 2020 rule it supplanted. Judge Barker concluded that the new rule unlawfully swept beyond common law limits and “would treat virtually every entity that contracts for labor as a joint employer.” The NLRB is reviewing the decision and considering next steps, which could include an appeal to the U.S. Court of Appeals for the Fifth Circuit. Under the now-vacated rule, an employer could have been a “joint employer” if it merely possessed the authority to control an essential term Employment E M P
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