Non Disparagement Clause

In the corporate United States, complicated documentation is one of the key elements. Maybe, there are no points in the documents that can confuse you more than a clause of non-disparagement. 

We strongly recommend you not sign papers that you do not learn and understand completely. Together, we will try to figure out what the clause of non-disparagement means; in what cases the employers use it, and the consequences of its breach. Besides, we will present you illustrations from the real contracts. 

First of all, let's try to find out what the clause of non-disparagement signifies. It implies a deal between the worker and the company's management that comprises the worker cannot share negative things about the organization, no matter what communication form. This contract point prohibits the workers from negatively speaking about their actual or ex-management and criticizing anything about them. It means the worker cannot share his point of view about the organization, discuss with the journalists any actions that will negatively affect the organization, etc. 

The clause of non-disparagement is considered a limiting deal together with agreements of non-solicitation and non-complete. Signing the clause of non-disparagement, the worker stops himself from speaking badly about the organization. Following this clause and ensuring non-breaching is considered a part of the deal between two subjects – the worker receives the job and dismissal wage. At the same time, the management keeps quiet about all negative things the workers experience. 

Here, we should clearly differentiate between disparagement and slander. Disparagement means true information about the management and their action, and slander, on the contrary, signifies disinformation. For instance, when the worker claims that his organization's products negatively affect the environment, it indicates that he shares disinformation. And when the worker states that his female colleagues face sexism from the management (and it is true), it means that the worker disparages the organization where he works. 

The cases when the employers apply the clause of non-disparagement

There are two standard cases when the workers sign the clause of non-disparagement – when admitted to work or retiring from work. The employers commonly include the clause of non-disparagement to bigger contracts along with deals of non-solicitation and non-complete. 

The organizations prefer their workers to sign the treaties at the very beginning of their labor relations (that is, when they are admitted to work) since, at this stage, the relations are good and not damaged. The new staff member cannot say something terrible about his management yet. By signing the treaty, the employers reinsure in case the relations go south. 

Besides, the workers can also sign a deal of separation, including the clause of non-disparagement. All these deals comprise the element of the case when the management part with the worker badly. 

When leaving the job, the workers do not sign the clause of non-disparagement with no cash rewards. The signing of a clause of non-disparagement always influences the number of benefits and redundancy pay that the employers get. If the worker receives big money when leaving the job, the management wants to reinsure he’ll not start saying bad things. 

When getting the job, the workers face the question of whether they need to sign a deal that comprises non-disparagement. We cannot respond to this question because every situation has its circumstances. Before deciding whether to sign or not, we recommend thinking about the following things:

  • If it is not necessary to sign this deal: You should do it only if the job requires this, and this job is a dream of your life, and you are ready to sacrifice your right to speak badly about the organization. But if it is not necessary when seeking employment, we recommend not doing it. 
  • The other thing you should consider is whether it is necessary to sign it for receiving separation pay. If the management does not propose the benefits and dismissal pay with no accepting the clause of non-disparagement conditions, we suggest you carefully think about all the variants. If money means more than a right to share knowledge and experience, in this case, you can sign it. If your lawyers suggest that the judicial proceeding will bring more money than dismissal pay or some benefits, you can use this instrument. 
  • If there is a guarantee that the employers will accept the same conditions: There is one thing that many people do not take into account along with the clause of non-disparagement is that a great part of organizations does not reciprocate the deal the same way as the workers. It means that if they want they can say some bad things about their workers in the future. This thing plays an essential role when the employees leave the job, as they will start looking for a new job, and they need to ensure that the organization will help them go ahead on their career ladder. 
  • How long does the clause work? : The clause of non-disparagement should work only for future events. It means that you should not be responsible for all the bad things you have done before signing the deal. So before signing any documents, you must be sure that the clause of non-disparagement will include all the things that will happen. 

As we are not jurists, we will not give you any right consultations. If you doubt any detail of the clause of non-disparagement, we recommend you ask for the specialists' help. 

Now, we will discuss what consequences you will have if you break the clause of non-disparagement. 

The consequences of breaking the clause of non-disparagement have fiscal nature – the organization will try to back all or simply some part of dismissal compensation. It will be right only if your agreement on the clause of non-disparagement provides the payment you get from the deal of separation (it is a typical case). 

If the organization can demonstrate that your bad words about them have been undermined from the financial point of view, you will have to pay compensation. But, in reality, it is tough to prove it. 

This is a reason why in the contracts of many companies, there is a point of "liquidated loss." This point includes a fixed wage for the deal breach. So if you violate several points of the deal, you will have to pay compensation for all the violations, plus return the dismissal wage. 

In practice, the cases when the workers can legally discredit the organization exist. For example, if you have got injured because of the management's wrong actions, you can file a complaint. 

Besides, if the organization has committed some breaches and the public institutions conduct the investigation, you as the worker can speak with these institutions and offer some evidence freely. It means that the organization cannot wall off the world by making all the workers sign the clause of non-disparagement. 

In fact, on any job, the workers should obey the clause of non-disparagement, but in reality, it is challenging to implement them sometimes. For instance, when you tell your relatives some bad things about your management, nobody will know it. Even if the organization knows it, it will be hard for them to win the lawsuit. 

Clauses of non-disparagement should not be so limiting, and until you implement the deal, everything will be alright. You should just be careful when saying some bad things about your employer. 

And now, we will give some examples of how clauses of non-disparagement look like. 

  • Chief executive is committed to not taking part in any cases, including writing and oral presentations (whispering campaigns, negative comments, and declarations) that cause injury to the organization's management, image, and management of firms that affect the organization. 
  • The example of reciprocal clause of non-disparagement: Organization and Chief are mutually committed to not distributing, publishing, and approving any offensive and derogatory remarks provided by any party towards any of them. Besides, the parties are committed to not spreading any non-confidential and public comments regarding complaints and claims against every party without mutual permission that must be made before such a declaration. 


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