Lucid Reaches Settlement with NLRB to Modify Severance Packages

The National Labor Relations Board (NLRB) has settled a case with Lucid in which the automaker has agreed to alter its severance agreements as they were deemed to contain illegal clauses. This settlement comes after a series of layoffs affecting roughly 18% of Lucid’s workforce, which amounted to about 1,800 employees, due to challenges in the production and delivery of their electric vehicles.

The legal action began when several ex-employees alleged that the severance agreements offered to them included provisions that unlawfully restricted their rights to engage in protected activities under the National Labor Relations Act. The case was filed in August 2023 following the May layoffs.

Responding to these allegations, the NLRB, on March 5, 2024, reached a settlement with Lucid. As per the agreement, first reported by IEN, Lucid is required to amend its severance packages to eliminate a contentious confidentiality clause and to ensure it does not enforce any such provision going forward.

Additionally, the company is mandated to distribute a notice highlighting employee rights throughout its facility in Newark, California, and to all relevant employees via email, including those who were part of the layoffs.

The NLRB’s intervention in Lucid’s case follows its McLaren Macomb decision in February 2023, reinforcing a long-established principle that severance agreements should not compel workers to waive their rights broadly. This principle was echoed in a memo by NLRB General Counsel Jennifer Abruzzo in March 2023, emphasizing that such agreements contravene the National Labor Relations Act.

SpaceX has also come under fire for imposing severance agreements that could potentially violate labor laws by preventing employees from making disparaging remarks or joining class-action lawsuits against their former employers.

SpaceX has contested the NLRB’s authority, filing a lawsuit that questions the constitutionality of the board’s structure.

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