Mintz On Air: Practical Policies – Disparage Me Not

Member Jen Rubin is joined by Member Natalie Groot for a practical conversation on non-disparagement clauses. This episode is part of a series of conversations designed to help employers navigate workplace changes and understand general legal considerations.

Together, Jen and Natalie explore:

1. Why and how non-disparagement clauses protect businesses
2. The legal restrictions on non-disparagement clauses
3. The difference between disparagement vs. defamation
4. Challenges in enforcement

Listen for insights on how employers can use non-disparagement provisions effectively, the legal limits on what they can cover, and why setting realistic expectations is critical.

Practical Policies – Disparage Me Not – Transcript

Jen Rubin (JR): Welcome to Mintz On Air, the practical policies podcast. Today's topic: Disparage Me Not. I'm Jen Rubin, a Member of the Mintz Employment Group with a San Diego-based bicoastal Employment Practice representing management, executives, and corporate boards. Thank you for joining our Mintz On Air podcast. If you haven’t tuned into our previous podcasts and would like to access our content, please visit us at the Insights page at mintz.com or find us on Spotify.

Today, I'm really happy to be joined by my Boston-based partner, Natalie Groot, who, like me, represents employers in all aspects of employment law, including answering the age-old question: “How do I make my employees say nice things about me?” Thank you for joining Mintz On Air, Natalie, and I assure you, everyone wants an answer to that question.

Natalie Groot (NG): It's a great one, Jen, and I'm happy to be here today. Thanks for having me.

JR: In today's world, with just the press of a button you can engage in all kinds of instant communication on virtually any topic. For employers, that kind of instantaneous gratification can be troubling. What has surprised me as an employment lawyer — and I've been doing this for a few years — is the staying power of this issue.

Commentary and video can go viral in an instant. When I started practicing, there was no access to social media. You couldn't send your commentary, comments — whatever they may be — with the press of a button. Today, this is an issue for employers and one they’re keenly focused on. So Natalie, let's lay the framework of this issue.

As always, we aim to provide some practical advice at the end of the podcast. Let's start with the first question. I think everybody wants to know this. What exactly is a non-disparagement clause?

What is a Non-Disparagement Clause?

NG: A non-disparagement clause is a contractual provision that restricts parties from making negative or defamatory statements about one another. For companies or employers, a non-disparagement provision is intended to prevent statements that disparage the company with respect to its products, services, finances, financial conditions, capabilities, or any other aspect of the company.

For individuals or executives, non-disparagement clauses often focus more on preventing comments that might harm someone's professional or personal reputation.

JR: It seems to me that these provisions have become somewhat of a workplace norm. As I mentioned earlier, people are very focused on this issue in this day and age. They have been for a very long time, certainly in my career. We see these clauses in employment agreements and policies and employee regulating documents.

Building on that, do you really need to ask your existing employees not to say negative things about you?

NG: Existing employees already have a duty of loyalty, and it shouldn't be a necessity to tell them not to say negative things about their employer and you hope that employees generally have good judgment that they wouldn't be engaging in this type of problematic conduct.

But there are also legal limitations on those restrictions. Under the National Labor Relations Act, employees have the right to speak about their wages and working conditions. They cannot be restricted in any way from those types of communications. There are certain MeToo provisions around sexual harassment. They're able to participate in government investigations. They're able to provide testimony in legal proceedings and make statements about workplace safety.

So, there are a number of statements and communications that employees cannot be restricted from engaging in. Generally, it’s once the employment relationship ends that employers become most focused on non-disparagement provisions.

Disparagement vs. Defamation

JR: Understood. So, on the one hand, employees have a duty of loyalty to act in their employer’s best interest. But as you mentioned that duty is tempered by some of these legal issues that restrict an employer from trying to silence their employees regarding certain issues.

You also noted that once we move past the employment relationship, these provisions may become a little more important. But before we get there, let me ask you a tough question: How do you define what is actually disparaging?

NG: That’s a great question, and it can be difficult to answer because context is everything in terms of these types of statements. There’s always a subjective element to what individuals believe is defamatory, derogatory, or harmful in some way.

For example, communications that paint someone in a bad light — especially in an unfair way, or in a way that isn’t entirely accurate or reflective of reality — can certainly be considered disparaging.

Now, some people think that any publicity, even bad publicity, is a good thing. Reasonable people might differ about what is or isn't disparaging, but I think it is a good general rule to think about disparaging statements as communications that could be harmful to someone's business or personal reputation if they're shared in any way, either in individual conversations or publicized more broadly.

JR: Drawing on that, I want to ask this question. You talk about something that might be harmful to somebody's business or personal reputation, and then at the same time we have the backdrop of good judgment, context, subjectivity, and reasonable people. It's tricky. We're all humans, and we all have different perspectives on the world around us.

Let's go back to the legal side. If something is nasty, does that mean it's also defamatory? In other words, what is a defamatory comment?

NG: It's a great question and one that I think folks conflate quite a bit, even though non-disparagement, disparaging communications, and defamatory communications are actually quite distinct.

Defamation is a civil tort, and it arises from the publication of a false statement. Importantly, it requires that the words be false, and the truth of a statement is a complete defense.

When we spoke about non-disparagement, we said it's a contractual provision where two parties are agreeing that they won't make negative comments about one another if it is mutual; otherwise, that one party won't make negative comments about the other. Those statements could ultimately be true, and they could still be a violation of a non-disparagement.

For defamation, it requires the words to be false, and so a defamatory statement also requires that the words be factual — not an opinion. When we draft non-disparagement provisions, we want to be sure that they're drafted generously to encompass both facts and opinions. Because you can disparage someone without defaming them. For example, saying “In my opinion, so-and-so is a bad manager,” you're not defaming them because you are not making a statement as fact.

The Problem with “Mutual” Clauses

JR : Thank you, that's a very clear explanation of the difference because I do think people conflate them. Let me ask you this question. So many employers are made up of obviously humans, although in this day and age of AI, we can question that statement. But let's assume that we're talking about a corporation with a thousand employees and that there's a mutual non-disparagement provision. The employee or the former employee agrees they're not going to make any statements that are disparaging about the employer.

If you're an employer with a thousand employees, would it be fair to say that each of those thousand people should be bound by a non-disparagement provision relating to the subject employee? How does that work?

NG: Absolutely not. I have this conversation with clients all the time when we include a non-disparagement provision, and the departing employee comes back and says, “Let's make it mutual.” I am very clear with them that I am not comfortable and they should not be comfortable with saying the company will not disparage you because who is the company?

The company is just a shell that operates through all of its agents and employees. Imagine a low-level intern goes to a bar and makes a comment about something that happened in the snack room at work, which may be a breach of a non-disparagement provision, even though that intern was not privy to the agreement, had no idea that the agreement was entered into, and yet if the language in the agreement says the company will not disparage you, it may constitute a breach of that provision.

From a corporate perspective, there are two approaches I’m comfortable with my clients agreeing to — one more conservative than the other. My preference is to say the company will instruct person A by name, not title, person B by name, not title, and person C not to disparage the individual. That language might be broader than just that statement, but it should be very clear that the company will provide a written instruction to certain individuals not to disparage.

Which means that if those individuals do engage in any disparaging communications, it’s not a breach of the agreement because the agreement itself only requires the company to provide a written instruction. Sometimes employees will push back and say, “I want more than a written instruction. I want assurance that they will not make these statements.”

If it is a limited group like someone is in the C-suite and reports to the CEO and wants to make sure that the CEO and the CFO do not make certain statements about them, I'm more comfortable having a conversation with these two executives who are deeply embedded in the organization and say, “Here's an obligation that you are undertaking here.” But if it's a broader group, I would hold with the instruction and I would never move to “the company will not.” It's too broad and it's too easily breached.

JR: This is a great point because this is something I also come up against in my practice. And the easiest way to understand it is: an employee — let's say an employee enters into one of these non-disparagement provisions — the employer, the individual has control over what they say. You understand what your obligations are, you're an individual, you can decide whether or not you're going to abide by those obligations.

But when you're dealing with a corporation with many different people who make up the corporation, it's much more difficult to, number one, control what all these people are going to say. But number two, how are you actually going to police the statements that these people make or don't make under the circumstances?

From a practical perspective, it just doesn't make sense to try to bind these thousands of people to these provisions. You want to be very specific, and giving the instruction is an excellent practical takeaway here because you're simply agreeing to give the instruction. What happens after that is really up to the humans who make the decisions to speak or not.

Enforcement and Proof

JR: Let's stick with the practical now because that's something that I always like to do in these podcasts, and it's hopefully very valuable to the people who tune in. We know that with non-disparagement provisions, there's going to be some limitations, as we discussed, that are placed by the law. There's going to be some limitations or considerations that employers need to think about when entering into them in terms of who’s signing them and the content of those provisions and how broad or detailed they are.

How do you enforce these things, Natalie? How do you go out there and invoke the legal process to make sure these things are given teeth by the courts?

NG: Another great question, Jen, and it can be difficult and the practical problems inherent in these non-disparagement provisions relate to proof and enforcement. If a statement is not written or posted on social media, as we see more and more frequently, it's difficult, if not impossible, to prove that the statement was made without resorting to a he-said-she-said.

Many times, I've had clients who have said: “Well, this person said this to this person, and the only way they would have known about it is if this other person who was subject to a non-disparagement.” We'd be asking a court, judge, and a jury to really believe in this narrative that we believe to be true without ever actually proving that person A made the statement to person B or person B to person C, because people are unlikely to make statements against their own interest like, “Yes, I did say that.”

It can be quite difficult, Jen.

JR: What about damages? How do you put a monetary value on a statement that's disparaging? Or do you?

NG: Also difficult, unless you contractually quantify the damages in advance through a liquidated damages provision. For example, if this provision is breached, then you will owe X amount, which the courts do scrutinize quite heavily and must be based in some practical damages, but that's unusual in a non-disparagement context. But the traditional formula of contract damages doesn’t really do justice to the harm, and a court is unlikely to issue an order preventing someone from saying or doing something unless you can prove that the person is really going to say or do it.

Then again, if a non-disparagement provision is important to the resolution of a dispute, which Jen, from an employer perspective, I find that the release of claims and the non-disparagement are the two portions of a separation agreement that employers seem to focus on the most, it can be important to have. Some of it, even without the monetary damages, serves as a communication to the employee that “We are paying you certain amounts in exchange for certain obligations by you. One of those obligations is a non-disparagement and we care about that.”

In Massachusetts — and I've looked into it more recently understanding that folks in other states will be listening to this — defamation cases can vary from a few hundred dollars in damages to a few million dollars in damages. There's a huge variation and a lot of that has to do with whether the defamatory statement was published and widely distributed, like in a newspaper or a public legal proceeding or on a website.

And non-disparagement cases, there were actually only two recently identified in Massachusetts. One, was around $10,000 in damages, and one closer to $100,000, but we're not seeing a lot of cases in which damages are being issued for non-disparagement. Largely, to your original point, Jen, it's hard to prove.

Do Non-Disparagement Provisions Really Work?

JR: Right, many employers take the position — rightfully so by the way — that having these provisions in an agreement gives the individual signatories a heads-up that they're important and that the money is exchanged for the person's promise to abide by these provisions. This is what a contract is all about. You enter into the agreement, you reach these agreements, and of course the expectation is both parties will use good judgment in abiding by those provisions.

Of course, the flip side is when that doesn't happen, that's when our Litigation practice grows. But in any event, I completely agree with everything you said. One thing I want to add, and then I want to close out with the final question, is that these things come up frequently in terms of you mentioned the going back to somebody said, triple levels of hearsay. But sometimes they're anonymous. There are certain websites that feature anonymous commentary and criticism, things like that.

There's a lot of frustration out there among employers when anonymous statements are sent around. Of course, the thinking is, let's find out how that happened, and it's almost impossible to do. There has to be a certain amount of realism that's accepted here in terms of the marketplace about what you're able to tie down and what you're able to prove.

Again, I go back to the hope that in entering into the agreement, the provisions and the covenants are taken seriously because that's the whole point.

With that said, Natalie, do you think these provisions really work? Do you think they keep people honest when it comes to abiding by their contractual covenants?

NG: I do. I think they keep people more honest. Whether it actually accomplishes the goal that the employer is trying to accomplish — maybe. But whether it gets us closer to that goal — yes. I do think that having these provisions in agreements makes someone think before they make certain statements. Maybe they're at a networking event, and they are about to make statements about a former CEO or they're about to make a statement about the sales numbers over the last quarter or the efficacy of the product coming out and they say, “I signed an agreement. I'm not going to make the statement that I otherwise would have made because it's a free country and I can say whatever I want.” I think it curbs that a little bit, probably in a positive way.

JR: That's great. I go back to what my mom used to say to me: If you have nothing nice to say, don't say it at all. When somebody does make a statement that's disparaging, and particularly in a public way, it often says more about the speaker than the subject. But in any event, I think these non-disparagement provisions are here to stay.

The teaching from this podcast is, think about who's signing them and why, how the individual is going to be bound, what is the enforcement mechanism, if at all, under the circumstances. Understand, of course, that many of these provisions come from and derive from state law. It's always important to understand what state you're operating out of when you're doing these things, as well as the external legal issues that need to be taken into consideration, as Natalie mentioned at the top of the podcast.

There are a number of laws that restrict an employer's ability to ask employees not to speak about certain things. Those are important provisions to keep in mind in drafting these things. So once again, I'm Jen Rubin and thank you, Natalie Groot and those who tuned into our Practical Policies podcast. Visit us at mintz.com for other content and commentary or find us on Spotify.

Subscribe To Viewpoints