May 06, 2026|Franchise Frontlines
May 6, 2026 | National Labor Relations Board Division of Judges | Administrative Law Judge Decision
Executive Summary
In an Administrative Law Judge decision, Judge Susannah Merritt of the National Labor Relations Board Division of Judges found that Detrex Corporation violated Section 8(a)(1) of the National Labor Relations Act by maintaining and proffering a severance agreement with confidentiality and non-disparagement provisions that reasonably tended to interfere with employees’ Section 7 rights. The General Counsel argued that the provisions unlawfully conditioned severance benefits on the forfeiture of protected rights. Detrex argued that McLaren Macomb should be overruled, that its Section 7 savings language preserved employee rights, and that revising the agreement would create a unilateral-change issue under the parties’ collective bargaining agreement. The ALJ rejected each defense, concluding that the provisions were not narrowly tailored and that generic language preserving “activity protected under Section 7” did not adequately inform rank-and-file employees of what they could still say or do.
Relevant Background
Detrex operates a chemical manufacturing facility in Ashtabula, Ohio. In February 2024, after a certification election, the Union became the exclusive collective-bargaining representative of Detrex’s full-time and regular part-time packaging, maintenance, and operating employees at that facility. The parties later bargained over a first collective-bargaining agreement, but the ALJ found that they did not bargain over severance agreement language and that the final agreement did not address the terms of Detrex’s severance agreements.
The dispute arose after Detrex terminated bargaining-unit employee Timothy Batanian on May 3, 2024. During the termination meeting, Detrex presented him with a termination letter and a “Release of All Claims” agreement. The release offered two weeks of additional pay in exchange for a release covering Detrex-related entities, successors, parents, subsidiaries, assigns, agents, officers, directors, employees, shareholders, and affiliated entities. Batanian did not sign the agreement, but Detrex later mailed him the same documents.
The challenged agreement included a confidentiality provision stating that Batanian could not “at any time” divulge or use “confidential and proprietary information” relating to the released parties, their businesses, and their customers. It also included a non-disparagement provision prohibiting disparaging or defamatory remarks, including electronic comments and social media posts, about the released parties or their customers and clients. Both provisions stated that they did not prohibit activity protected under Section 7 of the NLRA. A separate savings clause also stated that the release did not interfere with the employee’s right to file charges with the EEOC or NLRB or participate in agency proceedings, but it included a waiver of “any form of recovery or compensation” in such actions.
Decision
The ALJ applied the Board’s 2023 decision in McLaren Macomb, which held that an employer violates Section 8(a)(1) when it proffers a severance agreement conditioning benefits on the forfeiture of NLRA rights unless the agreement is narrowly tailored. The ALJ emphasized that McLaren Macomb focuses primarily on the language of the agreement itself and its tendency to coerce, not the employer’s motive or whether the employee actually signed the agreement. That framing mattered because Batanian never executed the release, but the ALJ found that the proffer itself could still violate the Act.
The ALJ found the non-disparagement provision overbroad because it prohibited “any disparaging or defamatory remarks” about a broad group of released parties, customers, and clients, without a temporal limit and without tailoring the restriction to communications that lose protection under established NLRA standards. The decision relied on the principle that employees may engage in public communications concerning labor disputes, provided those communications are not so disloyal, reckless, or maliciously untrue as to lose statutory protection. In the ALJ’s view, Detrex’s provision swept more broadly than that standard allowed.
The ALJ reached the same conclusion regarding the confidentiality provision. Because the agreement broadly covered confidential and proprietary information relating to the released parties, their businesses, and their customers, the ALJ reasoned that an employee could understand the clause to restrict discussion of terms and conditions of employment with coworkers, the Union, the Board, or third parties. The agreement did not define confidential information with sufficient precision or otherwise make clear, in practical terms, that employees retained the right to discuss wages, hours, workplace issues, and labor disputes.
Detrex’s most important defense was its savings language. Each challenged clause stated that it did not prohibit activity protected under Section 7 of the NLRA. The ALJ found that language insufficient because an average rank-and-file employee would not necessarily understand what “activity protected under Section 7” means. Quoting Board precedent, the ALJ noted that employees “do not generally carry lawbooks to work or apply legal analysis to company rules as do lawyers,” and concluded that the disclaimer offered reassurance only to readers with enough legal sophistication to parse it.
The ALJ also rejected Detrex’s argument that the Board should overrule McLaren Macomb. Although Detrex relied on a 2025 General Counsel memorandum rescinding earlier guidance on McLaren Macomb, the ALJ explained that General Counsel memoranda do not constitute Board law and do not bind ALJs or the Board. Because McLaren Macomb remained extant Board law, the ALJ applied it.
The savings clause created an additional problem. Although it preserved the right to file charges or cooperate with government agencies, it also stated that the employee waived any right to “any form of recovery or compensation” in such actions. The ALJ found that this language did not cure the challenged provisions and instead further restricted protected rights because Board precedent treats waivers of monetary recovery in NLRB proceedings as unlawful. The decision therefore ordered Detrex to cease maintaining or presenting release agreements with the overbroad provisions, rescind those portions of the agreement, and notify current and former employees that the language would not be enforced.
Looking Forward
This decision offers a practical reminder for employers, franchisors, and multi-unit operators that severance templates require the same level of labor-law review as handbooks, arbitration agreements, and workplace policies. Even when an agreement includes a carveout for NLRA-protected activity, the carveout may not be enough if the underlying confidentiality or non-disparagement language remains broad, indefinite, or difficult for non-lawyers to understand.
For franchisors, the case matters most as a compliance signal rather than as a franchise-specific holding. Many franchise systems, area developers, multi-unit operators, and franchisor-affiliated entities use repeatable employment documents across locations. That practice can promote consistency, but it also means that a problematic clause can scale quickly. A severance agreement that refers broadly to affiliates, customers, clients, officers, employees, and related companies may create avoidable risk if it does not clearly preserve the employee’s right to discuss workplace issues, labor disputes, wages, hours, and other terms and conditions of employment.
The decision also illustrates the difference between legal carveouts that lawyers understand and practical carveouts that employees can understand. Employers often try to preserve enforceability by adding language stating that nothing in the agreement restricts rights under applicable law. Detrex shows that, at least under current Board law, a generic reference to Section 7 may not do enough. A more practical approach may require plain-language carveouts that identify the categories of communications and activity the agreement does not restrict.
The remedy also deserves attention. The ALJ did not merely find that the agreement could not be enforced against the former employee who received it. The recommended order required Detrex to rescind the overbroad provisions and notify current and former employees employed since May 2, 2024, that the provisions would not be enforced. That remedy underscores why employers should review release templates before they are used, not after a charge is filed.
The decision remains an ALJ decision applying current Board precedent, not a federal appellate decision. Employers should therefore avoid overreading it as the final word on severance agreements, confidentiality provisions, or non-disparagement clauses. Still, the decision reflects the Board’s current approach and provides a useful checklist for risk management: define confidential information carefully, limit non-disparagement language to unprotected conduct where appropriate, avoid indefinite restrictions that sweep into labor-related communications, use employee-accessible carveouts, and do not waive remedies in agency proceedings in a way that could chill protected activity.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
