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Protecting your company with non-disparagement agreements

Making unpopular or difficult employment decisions is something that most California employers would rather avoid. Unfortunately, it is a part of running a business and it can simply be inevitable.

However, when the time comes to let an employee go, there are some things you can do to prevent disputes and protect your company from the backlash of a disgruntled employee. For instance, you can decide to include a non-disparagement clause as part of a severance agreement. 

When to consider including a non-disparagement clause

Some employers have all departing employees sign an agreement saying they will not disparage the company. Other employers reserve them for public figures or people with significant influence over others.

A non-disparagement clause can be worth considering if your company has a particularly strong reputation in the market, or if a termination is unexpected and likely to raise challenges or concerns.

What can happen if you don’t have a non-disparagement agreement in place

In many cases, there is little or no cause for concern if a former employee does not sign this type of agreement. If anything, he or she may say some unflattering things on social media, but it may not cause any damage to a company.

However, recently, Disney fired the Kermit the Frog performer after the man portrayed the iconic character for 27 years. There was evidently no agreement in place prohibiting the performer from speaking unfavorably about Disney, and the story made its way into national headlines. Not surprisingly, the performer painted the studio and its decision in an unfavorable light.

If you do decide to have one, legal guidance can be crucial

Before you ask employees to sign anything, it can be important that you understand what you are asking of them. You should also be prepared to enforce whatever agreement you have in place with the appropriate penalties. Further, you must be sure that the agreement is lawful and enforceable.

In order to ensure you cover all your bases from a legal perspective, it can be wise to discuss a non-disparagement clause and any other type of employment contract with an experienced employment law attorney.

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