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Home » Are Your Employee Non-Disparagement Clauses too Ambiguous?

Are Your Employee Non-Disparagement Clauses too Ambiguous?

by | Nov 1, 2023 | HR Legal Compliance

Non-disparagement clauses are contractual provisions that prohibit individuals, typically employees, from making negative or damaging statements about their employer, the company, or its representatives. These clauses aim to prevent the spread of harmful information, criticism, or disparaging remarks that could harm the reputation of the employer or its employees. Non-disparagement clauses are often included in employment contracts, separation agreements, or severance packages.

Employers may find non-disparagement clauses beneficial for several reasons such as protecting the company’s reputation and avoiding legal issues. Employers invest significant resources in building and maintaining their reputation. Non-disparagement clauses help safeguard the company’s image by preventing current or former employees from making public statements that could harm its standing in the industry or community. Also, unfounded negative statements made by employees could potentially lead to legal issues, such as defamation lawsuits. Non-disparagement clauses help employers mitigate the risk of legal disputes by setting clear expectations about communication and public statements.

While non-disparagement clauses serve these purposes, it’s important for employers to carefully draft these provisions to ensure they are reasonable, enforceable, and comply with relevant laws. Overly broad or vague clauses may be challenged in court, and employers should strike a balance between protecting their interests and respecting employees’ rights to express legitimate concerns or opinions.

Employment law experts suggest making a few straightforward adjustments in how you formulate terms within a separation agreement to preempt potential issues. Instead of opting for a non-disparagement clause, it is often advisable to rely on a neutral reference provision. However, if you decide to include a non-disparagement clause, clarity is crucial to avoid ambiguity. Ensure that the employer’s obligations and the employee’s commitments are distinctly outlined.

With a neutral reference provision, you agree to refrain from making any comments about the individual’s employment at your organization beyond essential details like hiring and termination dates. If you choose to go the non-disparagement route, confusion may arise if both parties do not share identical non-disparagement obligations.

When drafting a severance agreement, Arnold and Kim recommend incorporating a provision that explicitly states that the headings assigned to each provision hold no substantive meaning or interpretive significance. This precaution prevents a heading such as “Mutual non-disparagement” from being misconstrued as part of the agreement’s substance.

To further mitigate ambiguity, you can segregate the employer’s and employee’s sections of the non-disparagement provision and articulate that the employer’s responsibilities conclude once the directive against making disparaging remarks is communicated. Additionally, consider including a construction provision clarifying that any ambiguities should not be interpreted against the drafter, which, in this case, is the employer. Before reaching this stage, it is always wise to reassess the inclusion of non-disparagement clauses in your agreements.

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