Employers often include non-disparagement clauses in separation agreements in order to keep employees from harming the employer’s reputation after the employment relationship ends. The recent Ohio appellate court decision in Ohio Education Association v. Lopez, No. 09AP-1165, 2010 Ohio 5079 (Ohio App. 10th Dist. Oct. 19, 2010), suggests that non-disparagement clauses may be difficult to enforce.

The Ohio Case

Christopher Lopez was the former assistant executive director and general counsel for the Ohio Education Association (the “Association”), a non-profit corporation that serves as a statewide union for public school teachers and support staff. Lopez resigned from his employment with the Association in March 2001, and signed a severance agreement containing a non-disparagement clause. Lopez promised “not to at any time disparage, defame or otherwise derogate [the Association’s] Officers, Executive Committee Members, employees or agents.” Lopez subsequently left a voicemail message for the Association’s outside counsel in which he called the Association’s Executive Director a “slimebag.” The Association then sued Lopez for breach of the severance agreement.

The court found that, although Lopez’ statement technically violated the strict letter of the non-disparagement clause, it did not constitute a material breach of the contract. The court decided that the term “slimebag” is a slang expression that “is such a part of modern casual speech as to be almost meaningless.” Further, the court noted that Lopez was friendly with the outside counsel, and there was no evidence of any harm or detrimental effect to the Executive Director’s reputation because of the message.

Lessons for Employers

The Ohio Education Association decision suggests that Ohio employers may be able to enforce non-disparagement clauses in separation agreements only where there has been a material breach and the employer has suffered harm as a result. Because relatively few courts in other states have decided whether such non-disparagement clauses are enforceable, the Ohio Education Association decision may influence courts in states beyond Ohio. If so, in many instances, bitter former employees may get away with talking trash about their employers. Nevertheless, a non-disparagement clause can serve as a prophylactic that discourages a former employee from making statements that might harm the employer. In addition, in cases involving more serious disparagement, the employer still may have viable claims for breach of the separation agreement and defamation.