When entering into settlements or release agreements with departing employees, some employers want to bargain "hard" for non-disparagement provisions. The value of such contractual provisions is questionable. As a practical matter, no one can monitor effectively an ex-employee's communications, waiting to pounce on nasty comments made about the employer or its executives and managers. Moreover, only the naïve would assume that a former employee who is expected to make disparaging comments would change his or her views if forced to sign a non-disparagement provision. While a settlement or separation agreement may buy silence or deter bad-mouthing in some instances, such an agreement is of dubious value in the case of most day-to-day communications.
The public nature of lawsuits to enforce such provisions further undercuts the value of non-disparagement provisions. The very secrecy sought by an employer that requires a non-disparagement commitment must be broken when that employer sues for the former employee's breach of the covenant.
Another reason not to demand a non-disparagement commitment by a former employee is that, in most cases, the former employee reacts by making the same demand of the employer. This is hardly an even trade. Although a former employee has only one mouth to control, an employer is in no position to gag potentially hundreds of people in its organization with negative information or opinions about the former employee. Indeed, merely directing those people not to disparage a former employee often attracts more attention to the ex-employee's departure than would otherwise occur.
A recent Ohio court decision provides yet another justification for not making a non-disparagement clause a "deal-breaker." Ohio Educ. Ass'n v. Lopez, No. 09AP-1165 (Ohio App. Oct. 19, 2010). In that case, the Court held that a former employee's admitted remark to a third party that the Executive Director of the employer was a "slimebag" did not materially breach the non-disparagement provision of his severance agreement. That severance agreement expressly provided:
"Employee further agrees not to at any time disparage, defame, or otherwise derogate Employer's Officers, Executive Committee Members, employees or agents."
The severance agreement also incorporated a provision of his employment contract, in which the employee committed "not [to] . . . make any statement . . . that is harmful to or that diminishes in any manner (or that could be reasonably foreseen as such) the relationship between Employer, it[s] members, its employees, and its Subsidiaries." Shortly after the employee signed his severance agreement, he left a voice mail message for an outside attorney that represented the employer, referring to the Executive Director as a "slimebag." The message could also have been interpreted as saying that the Executive Director had told lies about the former employee, referring to "all this s that slimebag said to you."
The Court did not clearly explain why the "slimebag" comment was not a material breach of contract. It demeaned the comment, characterizing it as "common slang" and a "trifling figure of speech" of "little consequence." The Court also noted that the voicemail message was left for a long-time friend, although there was no exception for communications to life-long friends in the non-disparagement agreement. And, the Court stated that the former employee's dislike of the Executive Director was well known, although the covenant was not limited to disparaging comments not previously known by the listener or reader. The Executive Director and the former employer undoubtedly did not consider these to be reasons not to enforce the non-disparagement provision.