Is a Non-Disparagement Clause in a Severance Package Lawful?

Question from nick, Is a Non-Disparagement Clause in a Severance Package Lawful?

Answer from AI:

Non-disparagement clauses are common in severance agreements. They are generally legal and enforceable, but there are exceptions. It’s important to understand what these clauses mean and when they might be challenged.

Understanding Non-Disparagement Clauses

A non-disparagement clause is a provision in a contract that prohibits one party from making negative or damaging statements about the other. In a severance agreement, it typically means that the departing employee agrees not to say anything negative about the employer, its products, services, or employees.

When Non-Disparagement Clauses Might Be Unlawful

While non-disparagement clauses are generally legal, there are situations where they might be considered unlawful. For example, the National Labor Relations Board (NLRB) has ruled that broad non-disparagement clauses that prevent employees from discussing their employment conditions can violate the National Labor Relations Act (NLRA). The NLRA protects employees’ rights to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

Furthermore, non-disparagement clauses cannot prevent an employee from filing a complaint with a government agency, participating in an investigation, or providing truthful testimony in court. The clause you’ve quoted seems to acknowledge this, as it allows for truthful statements in response to legal process or governmental testimony.

Should You Sign a Severance Agreement with a Non-Disparagement Clause?

Whether you should sign a severance agreement with a non-disparagement clause depends on your specific circumstances. Here are some general considerations:

• Understand the implications: If you sign, you’re agreeing not to make negative statements about your employer. This could limit your ability to speak publicly about your experiences at the company.
• Consider the benefits: Severance packages often include financial compensation, continued benefits, or other perks. Consider whether these benefits outweigh the potential drawbacks of the non-disparagement clause.
• Seek legal advice: If you’re unsure about the implications of the non-disparagement clause, it’s a good idea to consult with a lawyer. They can help you understand the clause and negotiate the terms of your severance agreement if necessary.

Remember, this information is general in nature and may not apply to your specific situation. Always consult with a legal professional for personalized advice. You can find more information about non-disparagement clauses and severance agreements on the NLRB’s website and the Equal Employment Opportunity Commission’s website.