Non-disparagement clauses can be seen as a throwaway item, a suffocating burden, an essential protection, or a damned nuisance, each according to taste or context.
To begin with, lawyers tend to see these clauses as essential protections and they are sometimes right. But, right or wrong, they tend to insist upon them, especially in the employment context. This explains their prevalence but, of course, does not necessarily justify their use.
Just to illustrate the cases where they truly are an essential protection, you and a competitor have been fighting for years in court over ugly and untrue things that someone has said about you or your company - non-trivial things that have really hurt you. When it comes time to settle that case, a continuing non-disparagement obligation will be not only helpful but essential to the resolution. The same is true in many other legal fights. When emotions have run high, and parties have antipathy toward one another, it is good practice to help ensure the peace after their fight has been settled to require that they not speak badly of one another and to give a simple mechanism such as binding arbitration to help resolve any follow-on dispute over whether they have done so or not. In such cases, there are excellent reasons to bind parties contractually to restraints on their ability to speak where they would normally be free to do so.
The employment context gets trickier because the antecedent acrimony that characterizes a legal fight may well not be present at the time of a termination and the question then arises: why am I being artificially muzzled? And there is a point to this: why be barred from speaking truthfully about a former situation even if it might be negative? why be at risk of a harassing lawsuit over what it means that something "may" reflect "negatively" about someone? why, in an age of easy communication through social media, be made to feel you cannot even speak about something that may have been a major part of your life, perhaps for many years? What may be seen as a throwaway item by some can be felt to be suffocating by others, and all the more so because it is tacked onto a token severance that gives you very little in exchange.
That said, I would say that the overwhelming number of employers and employees alike see these simply as throwaway items. They figure no one will care about such clauses except the lawyers. And, in most cases, they are probably right. The question then becomes whether one should not sign as a matter of principle or whether to just sign and take the money. Most employees take the money.
Of course, employees can push back if they have leverage. No one is obligated by law to sign a separation agreement. If the terms aren't right, and can be made right, then push back. Insist that the token severance be made more substantial. Or that non-disparagement, if it is to be included at all, be made mutual (it can be quite a head-ache for a large employer to keep control of its many people to ensure that none speak badly of you). Or insist that it be narrowed or clarified so as to reduce or eliminate vagueness about what may or may not be deemed disparaging. Or insist that it be coupled with other considerations that give you benefits apart from your normal final pay, etc. This sort of negotiation can make these clauses a big nuisance from the employer standpoint and may cause the employer simply to drop the clause. However, all of this assumes employee leverage, which doesn't often exist in the routine case, and so, as noted above, most employees simply take the money, accept the restriction, and don't bother to look back.
And so it all depends. For the author of this piece, this was a critical issue. For many others, it is not. Context is critical. And for all but trivial cases, do check with a good lawyer to understand the implications of what you are signing. If the risks are real, there is nothing worse that a harassing lawsuit from a former employer angry with you over some statement you made out of emotion. This is what gives these clauses a bad name and it is also what can make them dangerous. In such cases, be cautious about exposing yourself to such risks in exchange for some token severance. It is probably not worth it.
A couple employers ago I was leaving a job to found a startup and talking to a lawyer about unrelated things and casually brought up the termination agreement they had asked me to sign. His response was "Unless you need the money, I don't see what reason you would ever have for signing that."
The lightbulb that went off in my head was that every legal document you sign is basically a business transaction: you give up something, they give up something, and hopefully what they're giving up is worth more to you than what you're giving up.
So one way to think about this is to forget whether it's "common" or "routine" and imagine this thought experiment. A former employer comes up to you on the street and offers you a couple thousand (or whatever the severance terms were) in exchange for giving up the right to say negative things about the company (and any other terms they ask for). Do you take it? Well, it depends on a lot, including your personal financial situation. For a tech worker, it's probably not worth it; a couple grand is a drop in the bucket compared to the risk of a lawsuit. But if you need to make rent next month and just want to move on with your life, there are some situations where it could be.
This is actually the legal definition of a contract. BOTH parties have to gain something. If I get you to sign a contract that says you will never speak negatively about me, but I don't give you anything in return, the contract is null and void. I believe this is referred to as "consideration." If there is no consideration (i.e., benefit) for you to sign the contract, then it can't be enforced.
That's why if someone asks you to sign it, you can either ignore it or demand some sort of consideration (e.g., compensation) in return for signing it. Otherwise, it's unenforceable.
You said context is critical and this is interesting because a friend of mine is currently dealing with how to handle termination for a contract job (1099 not W2) they were performing.
They had worked for this company for about about half a year now and every single itemized invoice, which should have been paid in X days, was paid over over 4 times X days late every time and the CEO was unresponsive to emails addressing this. The CEO was verbally abusive over the phone and in writing such as in emails and text messages. The contract stated that she would get $X amount for Y hours of work per week. After enough abuse they gave the company the notice and asked to be paid the already late invoice for the previous month and the current invoice submitted a day or two prior and due in less than a week. Now the company has presented a termination contract with all the sorts of reprehensible clauses we are discussing here and they are stating that the consideration is that they won't dispute the hours itemized on the last invoice. They refuse to pay the final invoice unless this person signs the termination contract. This isn't worth seeing a lawyer about given the invoice amount.
Furthermore, the person in question was hired to do administrative work for the company, which is what they did initially, but ended up handling almost exclusively personal issues for the CEO for last few months, which quite frankly strikes me as malfeasance since the CEO was paying for personal assistance needs with company funds. IMHO Some of the work performed should have been paid out of the CEO's pocket instead of the company's funds.
> This isn't worth seeing a lawyer about given the invoice amount.
It may be appropriate for small claims court, then.
> Some of the work performed should have been paid out of the CEO's pocket instead of the company's funds.
Not your friend's problem. That's between the CEO and the board. Maybe they want the CEO to have a personal assistant take care of minor but time-consuming personal matters.
Your friend had made a mistake. He should not have continued working without pay. There is nothing to be done here now. This CEO have an upper hand and your friend is not in a position to make any bargains. A take-away lesson - do not work without pay.
(just for a reference, what nationality is the CEO?
It is further questionable whether this person could even legally work as a contractor. Depending on the level of control the company exercised over how your friend performed their duties (and "admin stuff" sounds pretty hands-on to me), the government may actually consider them an employee. In that case the company is withholding wages, which would get them in a much bigger amount of trouble.
I'd like to see some fairness in the matter. I will sign all the non-disparagement clauses you guys like, if you do the same. In other words, the company cannot make any negative comments about me.
In general, I think fairness should be pushed way up front. Want me to give you two weeks notice? Okay. You give me two weeks notice before you "terminate" me.
It's all a contract, and there are two sides to it. I don't see any reason why one side gets all the royal treatment, whereas the other always gets the short end of the stick.
Only the life is unfair and the distribution of power is completely asymmetric here. You may actually need a positive reference about you and the company usually don't care what you say. You also don't have any way to verify and prosecute a company, if your former boss actually makes a negative comment about you (think a start-up, an immature founder gradually turning into a complete ass-hole under the pressure of real life and when feeling that you are deserting, when you decide to leave).
> the distribution of power is completely asymmetric here
I'm pretty sure there is no fundamental law of the Universe that makes it so, only the fact that it is allowed to persist in this state by the multitudes who actually (but unknowingly, it seems) hold the power to change it.
You know, "if only there was a way" for employees to unite, and therefore increase their bargaining power with employers.
I don't think that employee unions are helpful in the long term. I'd rather see individuals exercising some common sense and making good informed decisions. Like instantly recognizing bullies and not working for (with) them. Quitting, the moment such behaviour is directed toward anyone in the company. After all, if you see someone else being bullied/not paid/whatever, given time, there's a good chance it would apply to you as well.
> I'd rather see individuals exercising some common sense and making good informed decisions.
Make no mistake, I'd rather see that, too. But look around you. Is that how the real world really works? Is that the way of human nature?
It sure is nice to lounge around in some libertarian ivory tower, and pontificate about how people are such rational agents, and all that nonsense. Whereas outside it's Hindbrain City all the way. Look at how most people choose their diet - and look at the effects thereof - just to name one out of many chronically idiotic decisions that the masses do.
What you're proposing is not rational, it's a pipe dream (or the typical libertarian anti-union dogma). The rational thing is not to sit on your ass and do nothing. The rational thing is to recognize that there is a problem, get up, and fight.
The mutual non-disparagement contract is not all that mutual. As an employee you are prevented from talking bad about the company, so you will say nothing about them. However, if you are looking for a new job, your new employer may call your old employer to check up on you. If there is a mutual non-disparagement contract at play, they will be passed to the corporate console who will tell them that so and so employee did work for the company from date to date, but they can not discuss the matter any further. For all employees this is a huge red flag. And the best thing, when asked about it, the employee would not be able to explain the situation because of the same contract.
If your company asks you to sign a non-disparagement contract, ask them for a reference letter in return. Chose a project or 2 you did a good job on and ask them to write you a good or at least ok reference.
Exactly, many large companies have a company policy that limits them to only confirm the dates and title at the company. Any further elaboration is prohibited (positive or negative) and a former colleague of my missus did get into trouble for elaborating positively in a proper reference when they had such a policy in place.
What if the response is "No comment." as per corporate policy? I think a lot of people would interpret that answer to simply mean "no", but it doesn't necessarily mean anything regarding Jack(ie).
Yes, governments and corporations hate whistleblowers (and critics who know in-depth what they're talking about). I agree that leverage is important, and that's why people should band together in groups which increase leverage. Not to mention making these things de facto unenforcable.
To begin with, lawyers tend to see these clauses as essential protections and they are sometimes right. But, right or wrong, they tend to insist upon them, especially in the employment context. This explains their prevalence but, of course, does not necessarily justify their use.
Just to illustrate the cases where they truly are an essential protection, you and a competitor have been fighting for years in court over ugly and untrue things that someone has said about you or your company - non-trivial things that have really hurt you. When it comes time to settle that case, a continuing non-disparagement obligation will be not only helpful but essential to the resolution. The same is true in many other legal fights. When emotions have run high, and parties have antipathy toward one another, it is good practice to help ensure the peace after their fight has been settled to require that they not speak badly of one another and to give a simple mechanism such as binding arbitration to help resolve any follow-on dispute over whether they have done so or not. In such cases, there are excellent reasons to bind parties contractually to restraints on their ability to speak where they would normally be free to do so.
The employment context gets trickier because the antecedent acrimony that characterizes a legal fight may well not be present at the time of a termination and the question then arises: why am I being artificially muzzled? And there is a point to this: why be barred from speaking truthfully about a former situation even if it might be negative? why be at risk of a harassing lawsuit over what it means that something "may" reflect "negatively" about someone? why, in an age of easy communication through social media, be made to feel you cannot even speak about something that may have been a major part of your life, perhaps for many years? What may be seen as a throwaway item by some can be felt to be suffocating by others, and all the more so because it is tacked onto a token severance that gives you very little in exchange.
That said, I would say that the overwhelming number of employers and employees alike see these simply as throwaway items. They figure no one will care about such clauses except the lawyers. And, in most cases, they are probably right. The question then becomes whether one should not sign as a matter of principle or whether to just sign and take the money. Most employees take the money.
Of course, employees can push back if they have leverage. No one is obligated by law to sign a separation agreement. If the terms aren't right, and can be made right, then push back. Insist that the token severance be made more substantial. Or that non-disparagement, if it is to be included at all, be made mutual (it can be quite a head-ache for a large employer to keep control of its many people to ensure that none speak badly of you). Or insist that it be narrowed or clarified so as to reduce or eliminate vagueness about what may or may not be deemed disparaging. Or insist that it be coupled with other considerations that give you benefits apart from your normal final pay, etc. This sort of negotiation can make these clauses a big nuisance from the employer standpoint and may cause the employer simply to drop the clause. However, all of this assumes employee leverage, which doesn't often exist in the routine case, and so, as noted above, most employees simply take the money, accept the restriction, and don't bother to look back.
And so it all depends. For the author of this piece, this was a critical issue. For many others, it is not. Context is critical. And for all but trivial cases, do check with a good lawyer to understand the implications of what you are signing. If the risks are real, there is nothing worse that a harassing lawsuit from a former employer angry with you over some statement you made out of emotion. This is what gives these clauses a bad name and it is also what can make them dangerous. In such cases, be cautious about exposing yourself to such risks in exchange for some token severance. It is probably not worth it.