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Can employers still use non-disparagement clauses?

On Behalf of | Jun 16, 2023 | Employment Contracts |

Many employees are required to sign severance agreements when they leave a company. These agreements may contain any number of clauses that they must abide by. If they don’t, they’ll risk losing pay and benefits or they could even face legal action.

It’s been relatively common for companies to include non-disparagement clauses in those agreements. These clauses are meant to prevent former employees from airing their grievances about a company publicly and potentially costing it both financially and reputationally. Some non-disparagement clauses may even prohibit former employees from speaking privately in negative terms about a company. Some agreements include clauses that prohibit people from revealing that they’ve signed them.

Earlier this year, the National Labor Relations Board (NLRB) ruled that in many cases, non-disparagement clauses are prohibited in severance and other employee agreements because they violate the rights of current and former employees to speak freely about their working conditions. Further, the NLRB’s general counsel says the rule is retroactive. That means it can potentially apply to agreements signed years ago.

The new rule was spurred by a case filed by hospital employees here in Michigan. They had signed agreements that prohibited them from speaking disparagingly about their employer. Further, they were prohibited from mentioning that they were bound by agreements.

Exceptions to the rule

The NLRB’s rule must be followed by most private employers. However, exceptions may be made in some cases for those in top positions at a company. An executive who leaves a company and then goes public with complaints about their former employer likely will have a greater effect on that company’s fate than a lower-level employee would.

Further, people who have signed agreements with non-disparagement clauses aren’t free to take to Twitter or other social media site and air their complaints about their former employer, supervisors or co-workers unless they have evidence to back up what they’re saying, as doing so could lead to a defamation suit.

It’s important to understand your rights when a contract is put in front of you and after you’ve signed that contract. Employment laws and regulations are changing at the state and federal level all the time. That’s why if you have any questions at all about whether you’re violating an agreement or believe that you’re being wrongfully penalized for an alleged violation, it’s wise to seek legal guidance.


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