ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, July 3, 2013

A non-disparagement clause and a contract that pushes the limits without one

The NYT's (new) ethicist, Chuck Klosterman tackled the issue of non-disparagement clauses in last Sunday's magazine (you have to scroll down past the first question about the ethics of skipping commercials).  Klosterman stated that, "(n)ondisclosure provisions that stretch beyond a straightforward embargo on business-oriented “trade secrets” represent the worst kind of corporate limitations on individual freedom — no one should be contractually stopped from talking about their personal experiences with any company."  He adds, "You did, however, sign this contract (possibly under mild duress, but not against your will)."  A non-disparagement clause, however, is quite different from a blanket nondisclosure provision - the ex-employee may presumably talk about her personal experiences, as long as she leaves out the disparaging remarks.  "Mild duress" is an oxymoron since duress, by its definition, is not mild and if you sign something under duress, you are signing it against your will.  Despite getting the nuances wrong, the advice -- which is basically to say nothing bad but say nothing good either --  is sound. Sometimes silence speaks volumes.

Non-disparagement clauses in settlement agreements are fairly common and I don't think they are necessarily outrageous (it is a settlement agreement afterall).  That's not the case with this agreement, posted courtesy of radaronline and discussed at Consumerist.  The agreement doesn't contain a non-disparagement clause but still manages to be overreaching.  The agreement, purportedly from Amy's Baking Company , requires that its employees work holidays and weekends, and extracts a $250 penalty for no-shows.  It also forbids employees from using cell phones, bringing purses and bags to work, and having friends and family visit during working hours.  The contract also contains a non-compete clause, prohibiting employees from working for competitors within a 50 mile radius for one year after termination.  What the agreement doesn't contain is a non-disparagement clause - and a clause prohibiting employees from sharing the terms of the agreement with others.  My guess is that those clauses will probably show up in the next iteration of the contract....


[Nancy Kim]

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Section 5: "Any type of attitude will result in immediate termination." Does that include a positive attitude?

Posted by: Robert Zaza | Mar 22, 2014 6:47:50 AM

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