What is a Non-Disparagement Clause (Definition and Examples)

"Say nothing at all if you can't say anything good." When your school and parents wanted you to interact with your buddies on the playground, it worked out perfectly. But when it comes in the shape of a contract that is legally binding, this "speak-no-ill" regulation is much more severe.

A non-disparagement clause that forbids you from ever speaking negatively about a company to anyone, whether it appears in an employment contract or as part of a separation agreement, can be daunting. It can be unclear as well: What exactly is it stating, just like a lot of the paperwork associated with hiring and dismissing? What results does signing it have?

What is a Non-Disparagement clause?

A non-disparagement clause forbids parties from disparaging one another in any way. Non Disparagement clauses in employment agreements may apply to the employer, the employee, or both. These provisions often specify what each party is prohibited from saying and for how long following a resignation or termination.

Since harmful speech is not protected by the first amendment, non disparagement provisions are not covered by that clause. For instance, the employer may file a lawsuit for breach of contract if an employee makes critical remarks online after signing a non-disparagement agreement.

What is disparagement?

The dissemination of false and harmful statements that are disparaging another's property, business, or product is the legal definition of disparagement. Disparaging remarks are the same whether you say them to your coworker's best friend or the local press, but the issue arises when your employer learns of your remarks. The danger would be the neighborhood news.

Disparagement goes beyond defamation, which includes making maliciously false comments while intending to do so. It's wrong that you made up something to harm an employer. Even factual statements are forbidden by non-disparagement clauses. Even if it's true, you can't say anything bad about a potential employer.

What is a Mutual Non-disparagement clause?

Any of the firm's officers or board members, as well as the company itself, will not criticize the CEO or the business's operations. Additionally, refrain from taking any actions, saying anything, or making any written or verbal statements that could be expected to harm the CEO's reputation in either his personal or professional life.

In a similar vein, the CEO will refrain from disparaging the organization or any of its directors, officers, or employees or acting in any other way that could be reasonably expected to harm the firm or any of its directors, officers, or employees' personal or professional reputations.

Nothing in this document should be read as an attempt to prevent either party from fulfilling its legal obligation to respond to questions, where applicable.

Example of a mutual non-disparagement clause

The Company and its subsidiaries undertake to refrain from making or publishing any statements that are disparaging of the Executive or otherwise harm the Executive's reputation, and the Company will use its best efforts to persuade each of its executive officers and directors to uphold this agreement. 

The Executive pledges not to make or publish any statements that are disparaging of the Company, its affiliates, and their executive officers and directors, or that otherwise harm the reputation or business of the Company, its affiliates, and subsidiaries, as well as their officers, directors, and employees.

What is the purpose of a non-disparagement clause?

By including a non-disparagement clause in a contract, a business is shielded against criticism made to a third party. The success of a non-disparagement clause is supported by the fact that a company's goodwill and reputation influence its worth.

A Breach of Non-Disparagement clause

Depending on your business and the nature of the disparagement, your employer may or may not enforce their non-disparagement agreements. Is it likely that you will face consequences for criticizing them in front of your mother or a text message to your best friend? Most likely not. 

A non-disparagement agreement is still a contract with potential legal repercussions if you don't uphold your half of the bargain, just like any other legal instrument. Anyone should operate in a way that assumes that if they sign a contract, they must adhere to it and that if they don't, they risk having it enforced against them.

A breach of a non-disparagement clause typically has financial repercussions. You might be required to repay all or a portion of your severance pay if non-disparagement was a requirement for you to receive it, depending on the terms of the agreement.

You can also be required to make a damage payment. Damage estimation, however, can be challenging. It's quite difficult for your previous company to demonstrate how your negative social media comments negatively impacted them financially. 

As a result, you can encounter a clause known as a liquidated damages clause. As a result, if you disclose negative information about your former employer on Facebook, Twitter, and Instagram, you will be required to pay three times the specified penalty.

A non-disparagement agreement cannot preempt certain exceptions. A contract cannot prevent a person from submitting a workers' compensation claim or from claiming benefits due to an illness or injury. Additionally, you cannot prevent an employee from criticizing a law enforcement agency that is conducting an inquiry. You are free to speak with an agency if it is looking into your company's policies or if the Equal Employment Opportunity Commission is looking into a charge of discrimination, for instance.

Non Disparagement clause samples

Sample 1:

Executive consents that, both during and after his or her employment with the Company, he or she will refrain from making, issuing, releasing, or authorizing any written or oral statements to third parties that are disparaging or defamatory toward the Company or any of its members, directors, officers, employees, subcontractors, or agents.

Sample 2:

The Executive will never, at any time before or after the Separation Date, denigrate, paint in a false light, or criticize, verbally or in writing, the operations, goods, policies, choices, directors, officers, or personnel of the Company to anyone. 

The Company further acknowledges that none of the Executives, including the CEO and any executive officers who answer directly to him or her, would denigrate, misrepresent, or criticize the Executive to anyone or anything, either verbally or in writing. The Company shall notify the Board of Directors of the Company of this clause.

Sample 3:

Non-Disparagement agreement: The employee will not criticize or disparage the Company in any way. Employee shall not divulge information about the Company, make remarks about the Company, or take any other action that would embarrass, humiliate, or otherwise put the Company in a bad light. 

The Non-Disparagement Group (as that term is defined below) will be under the Company's instruction not to engage in any conduct that would embarrass or humiliate the Employee, bring discredit upon him, or otherwise cause or contribute to his being held in disrepute, while the Employee is a member of the Non-disparagement Group or while the Employee is employed by the Company.

Sample 4:

Non-disparagement clause: Consultant consents to refrain from speaking ill of the Company, any of its affiliates, or any of their current or former officers, directors, shareholders, employees, or agents, whether verbally or in writing, including on social media. 

Additionally, the Consultant promises not to act or behave in a way that may be anticipated to harm the reputation or goodwill of the Company, any of its affiliates, or any of its current or past officers, members, directors, shareholders, employees, or agents. The Consultant's commitment to give an accurate statement in court testimony is unaffected by these non-disparagement requirements.

Sample 5:

The executive is prohibited from criticizing the Corporation, its Subsidiaries, or any of their officers, directors, employees, stockholders, representatives, or agents, or from saying anything that could be interpreted as doing so, both during the duration of his employment and after. 

The Corporation shall use reasonable efforts to ensure that the following people refrain from disparaging assertions, orally or in writing, concerning the Executive from and after the termination of the employment Period, unless otherwise needed by applicable laws, rules, or regulations or as appropriate in the exercise of the Board's fiduciary duties (as determined by the Board with the advice of counsel).

Sample 6

I hereby pledge that both during the Employment Period and moving forward, I will refrain from speaking negatively about any Company Group member or that member's current or former directors, officers, or employees in any way, nor will I discuss any aspect of my relationship with any Company Group member or any behavior that may have led to the termination of my employment with any Company Group member. 

My responsibilities under this subparagraph (d), however, do not extend to disclosures that are necessary to comply with a court order, a government rule, or applicable legislation.

When can you be asked to sign a non-disparagement clause?

When you are recruited, you may be requested to sign an employment contract that includes a non-disparagement clause. This clause is frequently included with or next to a non-compete or non-solicitation agreement. 

Getting an employee to sign a contract up front, when everyone is content, guards against future negative publicity should the relationship turn sour.

The separation agreement, which you might be required to sign if you're getting fired, laid off, or otherwise departing on bad terms, is the second place you might come across a non-disparagement clause.

A non-disparagement provision may occasionally be included in the documentation for new employees at a corporation. However, in other cases, you won't be obligated to sign a non-disparagement agreement before things get sticky with layoffs, sackings, and other potential bad-faith ways for your employment to end. If this is the case, you may only get severance money if you accept a non-disparagement contract.

Whenever an employee is employed, it's sort of assumed that they won't criticize the firm while they're there for fear of being fired. But after leaving, a person can harbor ill will toward their previous employer; how are you going to persuade him to stop?

Employers attempt to include this non-disparagement language in a severance agreement, among other things. In other words, employers may need you to sign a non-disparagement agreement to receive your severance pay and/or benefits.

A non-disparagement clause serves as an insurance policy for an employer to shield their business from the potential negative commentary of an insider.

Common contracts where you will find a non-disparagement clause

• Divorce judgments
• Employment contracts
• Agreements prohibiting solicitation
• Non-compete clauses
• Separation contracts
• Contractor agreements
• Separation agreements
• Termination agreements

Must you sign a Non Disparagement agreement?

The only person who can tell you whether you feel secure signing a non-disparagement agreement is you. Just be sure to have all the details before you sign or not. Here are four questions you can ask yourself to help you evaluate your alternatives in light of what we discussed above.

Ask yourself:

• Do you have to sign it to be hired? Is this your ideal position? If so, you might be willing to give up your right to criticize the company in the future if you want it.

• Does signing it guarantee receiving severance? If you choose not to sign a non-disparagement contract, you forfeit your right to severance compensation and benefits. To you, is that worth it?
• Would this business consent follow suit? Without a reciprocal non-disparagement agreement, the corporation is free to criticize you in the future. A job where your reputation is also protected by your employer is great.
• How long does a non-disparagement clause last? Non-disparagement clauses should only apply to conversations in the future, not to anything you may have said previously. Sign documents only if they are explicit in stating that they solely apply to your future behavior.

Possible warning sign: The non-disparagement agreement should always apply to actions occurring after the day it was signed. Because a worker might have already disparaged their company in front of 15 people, it needs to be very clear what is excluded. 

You should make sure the agreement only applies to actions you take after signing it and does not cover any actions you have already taken. To be sure of this, speak with your employer or an employment lawyer.

Non Disparagement clause conclusion

A non-disparagement clause can be challenging to understand, and the circumstances that lead to your request to sign one may be tricky. However, being aware of what your employer is asking of you and what to think about before signing can assist you in making a choice that will allow you to safeguard your interests and ultimately advance toward exciting new chances.

Consider getting outside legal advice from a labor and employment lawyer if there is something you don't understand. Finding a local attorney with expertise in non-disparagement or severance agreements is ideal because local regulations could differ from those in other areas.