Lucid Motor Must Change Illegal Severance Agreements

By Staff
3 Min Read

Late last March, Lucid Motor announced plans to cut about 18% of the company’s staff, some 1,800 workers. The company had problems getting its electric vehicles off the line and onto the road.

As the company culled workers, a few former employees filed unfair labor practice charges against the manufacturer for language found in Lucid’s severance agreements.

The charge was filed in August 2023, following layoffs in May 2023, and accused Lucid of offering severance agreements with illegal provisions that prevented (or discouraged) workers from exercising their right to engage in activities protected by the National Labor Relations Act.

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This week, the National Labor Relations Board (NLRB) announced a settlement approved on March 5, 2024, forcing the EV maker to walk back some of the language in those severance agreements.

As part of the settlement, Lucid must revise its severance agreement and remove an overly broad confidentiality provision. The company is also prohibited from enforcing the provision and must post a notice of employee rights at its Newark, CA, facility. Lucid also has to email the notice to all current employees as well as those who were laid off.

In February 2023, the NLRB issued McLaren Macomb, which reinstated a longstanding precedent that says employers that offer workers severance agreements that require them to broadly waive their rights is a violation of the National Labor Relations Act. The decision involved severance agreements that prohibited furloughed employees from making disparaging statements about the employer or disclosing the severance agreement’s terms.

In a March 2023 memo, Jennifer Abruzzo, NLRB general counsel, said that severance agreements that force people to forfeiture their statutory rights to receive severance benefits violate the law. 

Lucid isn’t the only company dealing with labor problems related to overbearing severance clauses. According to Reuters, a complaint filed this week accuses SpaceX of doing the same thing by requiring laid-off and fired employees to sign unlawful agreements that bar them from disparaging the company and joining class-action lawsuits against it.

SpaceX recently filed a lawsuit claiming the NLRB’s structure violates the U.S. Constitution.

IEN reached out to Lucid, but the company has not yet responded to our request for comment.

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