Common Clauses

Are Non-Disparagement clauses enforceable?

Aug 1, 2023

Non-Disparagement clauses prevent you from saying bad things about your employer, something employers became increasingly concerned with given the growth of social media over the last decade. They’re found most commonly in Separation Agreements (covered last week), but can be found in any kind of NDA. There’s been a lot of movement on this clause in 2023, so let’s get right to it.

What is a Non-Disparagement Clause?

A non-disparagement clause prohibits you from making negative remarks in any format, typically for an indefinite duration. Failure to do so can make you liable for potential damages and other penalties.

Legislation Limiting Non-Disparagement Clauses

Compared to other clauses in its category (Non-Compete, Non-Solicit, Non-Disclosure, and Non-Cooperation), Non-Disparagements benefit from some of the most sweeping legislation limiting its usage.

  1. National Labor Relations Board (NLRB) ruled in McLaren Macomb (February 2023) that “employers may not offer employees severance agreements that require employees to broadly waive their rights” to “mutual aid and protection”. This decision made waves particularly given that it was retroactive, affecting all existing agreements as well.

  2. President Biden signed the Speak Out Act into law (December 2022) which “prohibits the judicial enforceability of a nondisclosure clause or nondisparagement clause agreed to before a dispute arises involving sexual assault or sexual harassment”.

  3. A number of states have passed legislation since the MeToo movement restricting Non-Disparagement clauses that limit speaking up about unlawful activities such as discrimination, retaliation, and wage violations. They include Washington, Oregon, Maine, California, Illinois, New Jersey, and more.

What to look out for in Non-Disparagement Clauses

The theme of the existing legislation is a broad ban on prohibiting speaking out against unlawful activities. The 2023 NLRB ruling on severance agreements expanded this ban into ones that waive rights to employee well-being, e.g. complaining about workplace safety concerns or toxic leadership behavior. Make sure any clause you’re being asked to sign not only doesn’t prevent these remarks, but has explicit language exempting them from the requirement.

What kinds of Non-Disparagement Clauses are allowed?

Existing legislation has largely continued to enforce the ability for employers to protect their trade secrets and confidential information. For example, posting online about how a non-public design flaw resulted in a bad product is very much violating an enforceable non-disparagement clause.

Non-Disparagement clauses are an unique subset of Non-Disclosure clauses that are by nature one-sided in protecting the employer. Historically, they’ve played a part in suppressing unsavory behavior from becoming public. We’re glad that the current momentum in labor legislation limits their enforceability and proliferation.

For advocacy and beyond,
The Ask Ginkgo Team

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