Are Non-Disparagement Clauses in Kentucky Severance Packages Still Legal After Recent NLRB Rulings?

For decades, companies across Louisville, Lexington, and Northern Kentucky routinely tucked sweeping "gag clauses" into standard separation agreements. Departing employees were told that if they ever said anything negative about their former employer, its executives, or its workplace culture-even to former coworkers or on personal social media-they would forfeit their entire severance payout and face thousands of dollars in liquidated damages. That standard corporate playbook was upended when federal labor regulators ruled that forcing everyday workers to choose between a needed severance check and their federal right to speak about working conditions violates federal labor law.

Whether a non-disparagement or confidentiality clause in your Kentucky severance package is legally enforceable depends heavily on your job duties, the exact wording of the restriction, and how federal and Kentucky statutes intersect. Understanding what your former employer can-and cannot-force you to keep quiet about is essential before you sign a separation contract or challenge an unfair restriction.

Section 7 Rights and the McLaren Macomb Standard

A common misconception among Kentucky workers is that Section 7 of the National Labor Relations Act (29 U.S.C. § 157) only applies to unionized factory or warehouse employees. In reality, Section 7 protects almost all private-sector, non-supervisory employees-whether unionized or non-union-in their right to engage in "concerted activities for the purpose of collective bargaining or other mutual aid or protection." Discussing wages, safety hazards, staffing shortages, discrimination, or unfair management practices with current or former coworkers is protected federal activity.

In McLaren Macomb, 372 NLRB No. 58 (NLRB 2023), the National Labor Relations Board ruled that an employer violates Section 8(a)(1) of the National Labor Relations Act (29 U.S.C. § 158(a)(1)) by merely offering a severance agreement that contains overly broad non-disparagement or confidentiality clauses that tend to chill Section 7 rights. Under this binding Board framework, any clause that bars a covered Kentucky employee from assisting coworkers with workplace complaints, discussing severance terms with colleagues, or speaking to government agencies remains a high-risk target for invalidation.

Supervisory vs. Non-Supervisory Employees

The single most important threshold question in evaluating a Kentucky non-disparagement clause is whether you are classified as an "employee" or a "supervisor" under federal labor law. Because supervisors are excluded from Section 7 protections under the National Labor Relations Act (29 U.S.C. § 152(11)), Kentucky employers can still legally require true managers, directors, and executives to sign broad non-disparagement and confidentiality agreements.

Who Counts as a Statutory Supervisor in Kentucky?

Simply having "Manager," "Team Lead," or "Supervisor" in your job title-or being paid a salary-does not automatically strip you of Section 7 protections. Under the National Labor Relations Act (29 U.S.C. § 152(11)), an individual is a statutory supervisor only if they hold the authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees (or effectively recommend such action) using independent judgment rather than routine or clerical guidelines. In the landmark Kentucky case NLRB v. Kentucky River Community Care, Inc., 532 U.S. 706 (US Supreme Court 2001), the U.S. Supreme Court held that the burden of proving supervisory status rests squarely on the party asserting it. However, even statutory supervisors are protected against retaliation if they refuse an employer's order to present an unlawful severance agreement to rank-and-file staff.

What KY Employers Can and Cannot Silence

Even for non-supervisory workers, not all negative speech is protected, and for supervisors, certain state and federal whistleblower rights can never be waived:

• What Employers CANNOT Silence (All Workers): Regardless of whether you are an executive or an hourly worker, a Kentucky severance agreement cannot prohibit you from filing a charge with or testifying before the Equal Employment Opportunity Commission, the Kentucky Commission on Human Rights, Louisville, or the NLRB. Under the Kentucky Civil Rights Act (Ky. Rev. Stat. § 344.280), employers are strictly barred from retaliating against any person who opposes unlawful workplace discrimination or participates in a civil rights investigation. Similarly, under the federal Speak Out Act (42 U.S.C. § 19403), pre-dispute non-disparagement and non-disclosure clauses are unenforceable regarding sexual harassment or sexual assault disputes.
• What Employers CANNOT Silence (Non-Supervisory Workers): Employers cannot bar rank-and-file employees from criticizing working conditions, pay disparities, safety issues, or management's treatment of staff, nor can they forbid workers from sharing the financial terms of their severance offer with coworkers or unions.
• What Employers CAN Restrict (Narrowly Tailored Defamation): Under the long-standing standard set in NLRB v. Electrical Workers Local 1229, 346 U.S. 464 (US Supreme Court 1953), employers can still enforce narrowly tailored non-disparagement clauses that prohibit statements that are maliciously untrue-meaning statements made with knowledge of their falsity or with reckless disregard for whether they are true or false-as well as disclosures of legitimate trade secrets or proprietary financial formulas.

Severability Clauses and Savings Disclaimers

What happens if you already signed a Kentucky severance agreement containing an illegal non-disparagement clause? Does the entire contract collapse, and do you have to give back your severance money? Fortunately for employees, almost every well-drafted Kentucky separation agreement contains a severability clause. Under both federal labor policy and Kentucky contract law, when a specific provision like an overbroad non-disparagement or confidentiality clause is found unlawful, the offending clause is "severed" (struck out), while the remainder of the contract-including your right to keep the severance pay and the general release of other claims-remains intact.

To avoid having their clauses struck down, many Kentucky employers now insert "savings clauses" or "carve-out disclaimers" stating that "nothing in this agreement is intended to restrict your Section 7 rights." However, federal labor regulators have emphasized that a vague, boilerplate disclaimer buried at the end of a contract will not automatically rescue a blatantly overbroad non-disparagement clause unless the disclaimer explicitly informs the worker in plain language of their right to discuss wages, working conditions, and workplace disputes with others.

Step-by-Step Process in Kentucky

If you are presented with a restrictive severance agreement in Louisville, Lexington, Bowling Green, or Covington-or if a former employer threatens to sue you for violating a gag clause-follow these practical steps.

Step 1: Determine Your Supervisory Status

Evaluate your actual day-to-day job authority against the criteria in the National Labor Relations Act (29 U.S.C. § 152(11)). If you did not have independent authority to hire, fire, discipline, or promote employees, you are likely covered by Section 7 protections regardless of your job title.

Step 2: Inspect the Non-Disparagement and Confidentiality Text

Highlight any language that prohibits you from making "any statement that could disparage or harm the image of the company, its parent entities, or its officers" without a time limit or a limitation to maliciously false statements. Also check for "clawback" or liquidated damages penalties that threaten to take back your severance pay.

Step 3: Request Narrow Tailoring or Mutual Non-Disparagement

Before signing, you or your attorney can ask the employer to narrow the clause so it only bars maliciously false defamation, and request a mutual non-disparagement clause requiring management and HR to provide only neutral job references and refrain from disparaging you to prospective Kentucky employers.

Step 4: File an Unfair Labor Practice Charge if Coerced

If an employer offers an unlawful severance agreement to a non-supervisory worker or attempts to enforce an illegal gag clause, you can file Form NLRB-501, Federal, National Labor Relations Board, Charge Against Employer with National Labor Relations Board Region 9, Cincinnati (located at 550 Main Street, Room 3-111, Cincinnati, OH 45202; phone 513-684-3686), which has jurisdiction over Kentucky workplaces. If the clause unlawfully restricts discrimination reporting, you can file Form EEOC-5, Federal, Equal Employment Opportunity Commission, Charge of Discrimination with the Equal Employment Opportunity Commission, Louisville or the Kentucky Commission on Human Rights, Louisville. State-law contract disputes over severance enforcement are litigated in state trial courts such as the Jefferson Circuit Court, Louisville or the Fayette Circuit Court, Lexington, while federal NLRB enforcement appeals go to the U.S. Court of Appeals for the Sixth Circuit, Cincinnati. Consulting a local Kentucky employment lawyer from our directory can help you negotiate safe, enforceable terms before you sign.

How Much Does It Cost in Kentucky?

Challenging an unlawful severance clause or having an attorney renegotiate your package involves the following cost structure:

• NLRB Unfair Labor Practice Filing Fee: $0 (filing Form NLRB-501, Federal, National Labor Relations Board, Charge Against Employer with National Labor Relations Board Region 9, Cincinnati is completely free).
• EEOC / KCHR Retaliation Filing Fee: $0.
• Kentucky Circuit Court Civil Filing Fee: Approximately $150 to $215 (plus service fees) if a breach-of-contract or declaratory judgment action is filed in a Kentucky Circuit Court.
• Employment Attorney Review & Redlining: Most Kentucky employment attorneys charge a flat fee of $400 to $950 to review a severance contract, redline unlawful non-disparagement clauses, and draft mutual protection language.

How Long Does the Process Take?

Strict federal and state statutes of limitations govern severance disputes:

• NLRB Statute of Limitations: Under the National Labor Relations Act (29 U.S.C. § 160(b)), an Unfair Labor Practice charge must be filed and served within 6 months (180 days) of the unlawful proffer or enforcement attempt.
• NLRB Regional Investigation Timeline: Once a charge is filed with Region 9, the regional investigation typically takes 7 to 14 weeks to reach a merit determination, settlement, or formal complaint, often resulting in the employer rescinding the unlawful language and posting Form NLRB-4722, Federal, National Labor Relations Board, Notice to Employees.
• Kentucky Written Contract Statute of Limitations: For supervisors or commercial contract disputes in state court, Kentucky enforces a 10-year statute of limitations for written contracts signed after July 15, 2014 (or 5 years for statutory claims under the Kentucky Civil Rights Act).

Frequently Asked Questions (FAQ)