What Is a Non-Disparagement Clause? (With Examples)

Confusing paperwork and contracts come with the territory of working in corporate America, and one aspect of this is 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, and what happens if you break it. We’ve also included some examples of non-disparagement clauses from actual contracts so you can see what they look like.

Key Takeaways

• Non-disparagement clauses are commonly included in hiring and termination paperwork.

• Non-disparagement clauses say that you can’t speak negatively about the company.

• Non-disparagement clauses are enforceable, but they do have their limits.

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 vs. Defamation

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.

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 advice from this article in mind to understand what they’re really saying.

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.

Non-Disparagement Clauses When You’re Hired

Unless you read all of your contracts carefully, you might not realize you’re signing a non-disparagement clause when you’re being hired, because they are often incorporated into a more extended contract that also covers non-compete and non-solicitation agreements.

Some additional places you might find a non-disparagement clause when you’re hired include:

• Stock or benefits agreements

• Your employment agreement

• The employee handbook

• Contractor 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.

Non-Disparagement Clauses When Your Employment is Terminated

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.

When your employment is terminated, check every document carefully to make sure you know what is being asked of you before you sign it.

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.

Limitations of Non-Disparagement Clauses

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. If your injury occured at work due to bad practices the company employed, you’re allowed to explain the situation truthfully.

• If a government agency investigates the company. Whether the investigation is 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.

• If you complain to a friend or family member who has no power to change what the company is doing. 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 FAQ

1. Are non-disparagement agreements enforceable?

   Yes, non-disparagement agreements are enforceable. Non-disparagement agreements are legal documents that hold as much weight as any other legal document that you sign. That is why it’s so important that you read and understand everything you sign regarding your employment – and anything you sign at any time.

   If you sign a non-disparagement agreement and then write a post on social media about how your boss is a jerk, you are breaching your agreement, and you can be held accountable as specified in your contract. This can range from being terminated to having to pay substantial monetary fines.

   It’s also key to note that not knowing or understanding what you’re signing is not an excuse. You’re expected to completely understand every legal document you sign.

   While it’s true that a lot of people don’t take the time to read everything or thoroughly understand them, they are taking that risk on themselves by not being thorough, it is not the fault nor the responsibility of the other party to make sure you understand what you are signing.

2. What is a disparaging statement?

   A disparaging statement is any negative statement. Disparaging statements can be absolutely true and even proven, and they can be false or supposition. They’re simply negative in nature.

   In the world of business, a disparaging statement clause is typically in place to protect anyone from saying negative things about the company, their products, their practices, other employees, management, and sometimes even customers.

   And it’s key to note that a disparaging statement doesn’t need to be vocalized; it can be written down or communicated in other manners – this can include videos and social media.

3. Are non-disparagement clauses enforceable in California?

   Yes, non-disparagement clauses are enforceable in California, but there are limitations on what those clauses can cover. Of particular concern is the hiding of certain unlawful acts in the workplace with unenforceable non-disparagement clauses.

   For instance, if an employee is being sexually harassed, a non-disparagement clause could theoretically prevent them from saying anything. But because sexual harassment is unlawful, the clause doesn’t apply to this, and the employee is free to complain and start a lawsuit against that person.

   And it’s all unlawful acts that are not included in non-disparagement clauses, not just sexual harassment in California.

4. How do you prove disparagement?

   Disparagement is proven with written or documented evidence, testimony, and recordings. Sometimes, disparagement isn’t easy to prove, especially in the past, because it becomes one person’s word against another. How does a company prove that Jimmy talked badly about his boss to Sally if Sally won’t tell what Jimmy said?

   But with the implementation of social media, more people take their disparaging comments to that audience rather than just a trusted co-worker and friend. This makes it pretty easy for a company to prove that there were disparaging remarks made about them.

   Screenshots, still-existing posts, saved videos, etc., are all used in court against people who have made disparaging comments.

Author

Matthew Zane

Matthew Zane is the lead editor of Zippia's How To Get A Job Guides. He is a teacher, writer, and world-traveler that wants to help people at every stage of the career life cycle. He completed his masters in American Literature from Trinity College Dublin and BA in English from the University of Connecticut.