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- How To Quit
- The Process
- Leaving The Office
- Other Ways To Leave
Confusing paperwork and contracts are part and parcel of working in corporate America. Perhaps no aspect of the contracts a company may ask you to sign is more confusing than the non-disparagement clause.
You should never sign something you don’t fully understand, so we’ve broken down exactly what a non-disparagement clause is, when it’s used, what happens if you break it, and some sample language from actual contracts.
What Is a Non-Disparagement Clause?
A non-disparagement clause is part of an agreement between employer and employee that states the employee won’t speak negatively about the company in any form of communication. That means you can’t badmouth your current or former employer’s leaders, products, or services in any way. No telling your friends what a buffoon your boss is, no posting rants about the company on social media, and no talking to reporters about corporate practices that will reflect poorly on the company.
A non-disparagement clause is known as a “restrictive covenant” along with non-compete and non-solicitation agreements. With a non-disparagement clause, you are restricting yourself from criticizing the business. Complying with this clause and making sure you don’t breach is part of the agreement between the parties: you get a job or a severance package, and the company gets your mouth zipped on anything negative you perceive during your time at the company.
Disparagement is different from defamation. Disparagement includes truthful statements about the company, while defamation only covers false statements. In other words, if you say your company’s products cause cancer, and they don’t actually, you’ve defamed your company. If you talk about how your boss mistreats women in the workplace, and he actually does, you’ve disparaged your company.
When Is a Non-Disparagement Clause Used?
Companies typically ask employees to sign a non-disparagement clause in two circumstances: upon hiring them or terminating their employment. They are often incorporated into a more extended contract that also covers non-compete and non-solicitation agreements.
Businesses like employees to sign these contracts as part of the hiring process because, at that point, the relationship is entirely positive, and the new hire can’t imagine speaking ill of their employer. They protect the company if the relationship turns negative down the road.
Additionally, an organization may ask an employee to sign a separation agreement that includes a non-disparagement clause. These agreements are usually part of the process if you’re leaving the company on bad terms, whether you’re being fired, laid off, or quitting due to unfair workplace practices.
Companies don’t ask you to sign non-disparagement clauses upon termination without offering an incentive. Usually, your severance pay and benefits are contingent on you signing a non-disparagement clause. If the company gives you a bunch of money to terminate you, they want to make sure you won’t go out and start talking smack about them.
Should You Sign an Agreement With a Non-Disparagement Clause?
There’s no right or wrong answer to whether you should sign an agreement with a non-disparagement clause. Consider a few things before making a decision:
Do you need to sign it to get the job? If signing an agreement with a non-disparagement clause is necessary to get a position, and you want that position badly enough to give up your right to ever talk negatively about the company, then you should sign it.
However, if getting the job doesn’t hinge on assenting to these terms, you’re better off not locking yourself into anything.
Do you need to sign it to get severance? If a company won’t offer you severance pay and benefits without agreeing to the terms of non-disparagement, you need to weigh what each option is worth to you. How much money are they offering, and how long will your benefits continue if you sign it?
If you value that severance package more than your ability to talk about your experience, then you should sign it. If you’ve consulted a lawyer and think a lawsuit against the company might yield more money than the severance package hush-money, then you can go with the litigation option instead.
Will the company agree to the same? One thing most people don’t consider with standard non-disparagement clauses is that most companies don’t agree to reciprocate the deal. In other words, they can still speak ill of you in the future if they so wish.
This is a big deal when you’re being terminated, considering you’re about to start a job search and need to know whether the company will vouch for you moving forward.
What time frame does the non-disparagement clause cover? A non-disparagement clause should only cover future communications. In other words, you shouldn’t be on the hook for all the badmouthing you did before you signed the contract. Make sure that the non-disparagement clause clearly lays out that it only applies to your conduct going forward.
We aren’t lawyers, and we can’t give specific legal advice. If you’re unsure about the specific terms laid out in a non-disparagement clause, seek the opinion of legal counsel. Look for an attorney who specializes in workplace fairness; they’ll be best equipped to communicate what exactly you’re agreeing to.
What Happens if You Break a Non-Disparagement Clause?
If you break a non-disparagement clause, the consequences will be mainly financial; the company will attempt to get back all or part of your severance package. This is only true if the money you received from the separation agreement was contingent on you agreeing to a non-disparagement clause (which it usually is).
You might also have to pay damages if the company can prove that your words caused them financial distress. However, it’s challenging for companies to make this argument and assign a dollar value to the damage your words caused.
That’s why many organizations will include a “liquidated damages clause,” which provides a set rate per violation of the agreement. So if you blast your former employer on three different platforms, you’d have to pay for each violation, in addition to returning your severance pay.
There are a few situations where an employee can legally disparage the company after signing an agreement with a non-disparagement clause. If you need to file for a workers’ compensation claim because you were hurt at work due to bad practices the company employed, you’re allowed to explain the situation truthfully.
Additionally, if a government agency investigates the company, whether that be because of discrimination within the company or the company is flouting regulations from the FDA or EPA, then you’re allowed to talk to speak freely to that agency. In other words, a company can’t build an iron curtain around their policies by having everyone agree to a non-disparagement clause.
While non-disparagement clauses are legally binding and enforceable, they are rather difficult to enforce in certain situations. Obviously, if you tell your mom what a jerk your boss was, the company won’t find out. Even if they did, they’d be hard-pressed winning a court case.
Non-disparagement clauses aren’t meant to be so restrictive, and as long as you follow the spirit of the agreement in good faith, you should be fine. Just don’t go out and write a tell-all book on your former employer’s horrible practices.
Non-Disparagement Clause Examples
The following examples are from LawInsider.com. As with most contracts, they’re written in hard-to-understand legalese; just keep our above advice in mind to understand what they’re really saying.
Non-Disparagement. Executive shall not, at any time during the Term and thereafter, make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Bank or the Company or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from making truthful statements that are required by applicable law, regulation or legal process.
Non-Disparagement. Executive covenants and agrees that Executive shall not engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumors, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or good will of the Company, its management, or of management of corporations affiliated with the Company.
Mutual Non-Disparagement. Director and the Company mutually agree to forbear from making, causing to be made, publishing, ratifying or endorsing any and all disparaging remarks, derogatory statements or comments made to any party with respect to either of them. Further, the parties hereto agree to forbear from making any public or non-confidential statement with respect to the any claim or complain against either party without the mutual consent of each of them, to be given in advance of any such statement.
Mutual Non-Disparagement. The Company and subsidiaries agree, and the Company shall use its best efforts to cause its respective executive officers and directors to agree, that they will not make or publish any statement critical of the Executive, or in any way adversely affecting or otherwise maligning the Executive’s reputation. The Executive agrees that he or she will not make or publish any statement critical of the Company, its affiliates and their respective executive officers and directors, or in any way adversely affecting or otherwise maligning the business or reputation of the Company, its affiliates and subsidiaries and their respective officers, directors and employees.
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