There are many different situations where you might find a non-disparagement clause in an agreement, from litigation settlement to a contract to work with someone who is notoriously difficult. This clause contains a big work that effectively means you won’t talk badly about the other party. These clauses are legally enforceable and are often enforced, so it’s important to understand what it might mean to you before signing the agreement.
In fancier terms, disparagement means to discredit, dishonor, or lower in credit or esteem. In essence, when you sign an agreement with a non-disparagement clause, you won’t say anything that results in a perception of the person or company you’re speaking about having less worth. If you’ve signed a non-disparagement clause for your employment, you can’t then go around discussing how the products your employer makes are worthless. If you’ve agreed to represent a company in a marketing contract and signed a non-disparagement agreement, you don’t want to talk about how hard they are to work with or how the event they’re marketing is going to be a total flop. You’re not saying anything that is untrue or malicious, you think you’re stating the truth to your friends, but it discredits the other party, you’re in violation of your agreement.
Non-disparagement clauses are common in employment contracts and even more so in severance agreements. These are valid contracts, although note that employers cannot prohibit you from reporting concerns to government agencies. If the non-disparagement clause in your contract does not contain this exception, you should ask for it to be added.
If one company is working for another and the contract agreement contains a non-disparagement clause, then the contracting company needs to make a point of explaining to all employees, interns, and team members that the clause is in place and what it means. The last thing you want is an agreement in place for a major project and a summer intern posting on social media about how awful working on the project really is.
You may wonder if this limits your 1st Amendment right to free speech. However, your right to free speech does not apply to a private setting such as a business contract and further, by signing the agreement, you’ve waived your right, which you are allowed to do.
Violating a non-disparagement agreement can lead to a lawsuit, which is likely to happen if you do it in a public forum such as a news article or on social media. You may be required to pay back any funds you were given when you signed the agreement and may be responsible for additional monetary damages as well. If your contract allows, you may also be responsible for the attorney’s fees of the party suing you.
If you’re signing a contract with a non-disparagement agreement in it, be sure to reach out for legal advice about how this applies to you and your business. The team at Virtus Law Firm can help you understand the details of any contract you sign and can also craft contracts that are fair and protective. Reach out to us at 612.888.1000 or by emailing firstname.lastname@example.org.