Non-disparagement clauses are a common feature of employment agreements. Sometimes, they’re included in the contracts that employees sign when they join a company. In other cases, they’re part of severance agreements that employees sign as they leave a company. These clauses typically prohibit current and former employees from publicly or even privately disparaging a company. Typically, the consequence of doing so include a lawsuit against the person who violates the clause and the loss of severance pay and other benefits.
At a time when non-compete and non-disclosure clauses are increasingly being limited and even prohibited, the federal government has also taken a closer look at non-disparagement clauses. These are all considered restrictive clauses that give employers the right to limit employees activity, even after they’ve left a company.
The NLRB’s rule issued last year
Last year, the National Labor Relations Board (NLRB) issued a new rule limiting non-disparagement clauses in severance agreements. According to the NLRB, the rule, which was part of a decision in a specific case, prohibits employers from “offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.”
The rule, which is retroactive to agreements previously signed, applies to most private employers. While employers may still be able to include non-disparagement clauses in executives’ agreements, they are now limited in restricting other employees’ rights to speak out about their former employers.
Of course, this rule doesn’t apply if a former employee knowingly makes false statements about a company or its employees or management. Those who do that can be sued for defamation. However, as the chairman of the NLRB said, “It’s long been understood by the Board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights under the National Labor Relations Act.”
Severance agreements can have all kinds of clauses tucked into them that can unnecessarily – and illegally – restrict someone if they accept a severance package. Some can even restrict the rights of workers who have not accepted any severance. This is just one reason why it’s always wise to get a legal review of any employment-related contracts before signing them.