The National Labor Relations Board (NLRB) has ruled that employers can legally no longer offer severance agreements that require employees to “broadly waive” labor rights.
The ruling surrounds situations where employees would be required to agree to a non-disparagement agreement in order to claim a severance package upon exit, something not entirely uncommon in the game development world.
This reverses an earlier decision from 2020 where the Board ruled that it was not unlawful on its own for employers to require such agreements. Its new decision was brought on by realizing employers offering severance to employers by having them broadly waive their rights away violated the original National Labor Relations Act.
“The Board observed that the employer’s offer is itself an attempt to deter employees from exercising their statutory rights, at a time when employees may feel they must give up their rights in order to get the benefits provided in the agreement,” it wrote.
“It’s long been understood by the Board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights under the National Labor Relations Act,” wrote NLRB chairman Lauren McFerran.
While the NLRB’s decision prevents employers from establishing NDAs to employees going forward, there’s no mention about if it could be established retroactively.
Developers are speaking out against restrictive contracts
Game developers have become increasingly vocal about key employment issues like conditions at major studios or exploitative clauses in contracts.
Earlier in the month, Game Developer spoke with several developers who made their dislike of legal practices such as non-disparage agreements and non-competes quite clear.
When speaking to developers about noncompete clauses, one person interviewed told us he had asked to be from his agreement by a former employer. He recalled that employer basically saying, “If you we can’t have you, then neither can anyone else. Remember, you agreed to it.”
Another developer claims that a high-ranking employee wanted one of their coworkers fired for creating an indie game in their own time, leading to a “conflict of interest.”
With the NLRB’s ruling, developers may be able to speak more freely about their time at other studios and how contracts like non-competes affect how they work.