Your departing employee just posted a scathing review on Glassdoor. Your former contractor is bad-mouthing your company to potential clients on LinkedIn. Your last settlement agreement left reputation protections to boilerplate.
A non-disparagement clause is a contractual provision restricting parties from making negative public statements about each other, typically in employment separations, business settlements, and contractor agreements. Legal teams face mounting pressure to protect reputation while navigating restrictions under the Speak Out Act and state employment laws.
This guide covers what non-disparagement clauses are, how US courts enforce them, what statements constitute disparagement, red flags, drafting guidance, and how contract management systems help standardize these clauses across your portfolio.
What is a non-disparagement clause?
A non-disparagement clause prohibits one or both parties from making negative, critical, or damaging statements about the other party, their business, products, services, employees, or reputation. These clauses cover oral, written, and online communications across all channels, including social media, review sites, interviews, and professional networks.
For example, a departing executive’s severance agreement might include mutual non-disparagement provisions preventing both the executive and company from publicly criticizing each other. Most non-disparagement clauses appear in employment separations, contractor agreements, and dispute settlements where relationships have ended and both parties want to move forward without reputational damage.
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Book a DemoWhen are non-disparagement clauses used?
Non-disparagement clauses appear most frequently when professional relationships end or disputes get resolved, serving as preventive measures against reputational harm. Understanding where these clauses typically appear helps legal and HR teams build appropriate governance into their contract workflows.
1. Employment contracts and offer letters
Employment contracts and offer letters sometimes include non-disparagement provisions, though these are becoming less common in initial employment agreements due to enforceability concerns and potential conflicts with NLRB guidance on employee rights to discuss working conditions.
When included, they typically appear in executive-level agreements where reputation protection is mutual.
2. Severance and separation agreements
Severance and separation agreements represent the most common use case. When employees leave, whether voluntarily or involuntarily, companies often Econdition severance payments on the departing employee’s agreement not to disparage the company, its leadership, or its practices.
These separation agreements typically bind the employee immediately upon signing. The company’s obligation, if mutual, may be limited to senior management and official company communications rather than all employees.
3. Mutual vs. one-sided clauses
Most non-disparagement provisions are one-sided, binding only the departing employee while leaving the company free to respond to inquiries or disputes. This asymmetry creates negotiation leverage for employees, especially executives with significant bargaining power who can demand truly mutual obligations.
A mutual non-disparagement clause binds both parties equally and is more likely to withstand legal scrutiny.
4. Settlement agreements
Settlement agreements between businesses or in litigation frequently include mutual non-disparagement clauses as part of broader dispute resolution. After companies resolve contract disputes, partnership disagreements, or litigation, both parties typically want to prevent ongoing reputational attacks that could damage customer relationships or business confidence.
Legal teams managing settlement agreements should ensure non-disparagement language aligns with confidentiality provisions and doesn’t create enforcement conflicts.
5. Divorce and family law settlements
Divorce and family law settlements occasionally include non-disparagement provisions, particularly in high-net-worth divorces where one or both spouses have significant business interests or public profiles. However, family courts scrutinize these clauses carefully to ensure they don’t restrict a parent’s ability to discuss legitimate parenting concerns or comply with legal obligations.
The key pattern across all these contexts: non-disparagement clauses favor the party with greater bargaining power, typically the employer or the business with more resources. This creates negotiation opportunities and potential enforceability challenges that legal teams should address during contract review.
What does a non-disparagement clause typically cover?
Non-disparagement clauses vary widely in scope and specificity, but most share common structural elements that define who is protected, what statements are restricted, and what happens if someone breaches the clause. Legal teams need to understand these contract clause components to draft enforceable provisions and to identify problematic language during review.
| Component | What it covers | Why it matters |
| Parties covered | Company, affiliates, officers, directors, employees, board members | Broader definitions create larger enforcement obligations and potential liability |
| Types of statements | Negative, harmful, critical, disparaging remarks about business reputation | Vague definitions may chill legally protected speech |
| Communication channels | Oral, written, social media, review sites, interviews, media | Comprehensive coverage prevents workarounds but increases monitoring challenges |
| Time period | During employment and indefinitely after termination | Indefinite terms face enforceability challenges in some states |
| Remedies | Monetary damages, severance clawback, injunctive relief, attorney’s fees | Clear remedies strengthen enforcement; aggressive terms may deter signing |
Parties covered: Well-drafted clauses explicitly identify who is protected. Employer-side clauses often cover the company, subsidiaries, affiliates, officers, directors, employees, products, and services.
Employee-side protection in mutual clauses typically extends only to the individual and sometimes their immediate family. This asymmetry reflects that companies have broader reputational exposure.
Types of statements: Effective clauses define disparagement specifically rather than prohibiting any negative statement. Common definitions include statements that damage reputation, harm business relationships, or injure professional standing. Specificity helps courts enforce provisions while preserving legitimate criticism.
Communication channels: Comprehensive clauses cover oral statements, written communications, social media, review websites, media interviews, professional networking, and industry events. This breadth prevents workarounds but increases monitoring challenges.
Remedies: Enforcement provisions specify consequences for breach, such as returning severance payments (clawback), monetary damages, injunctive relief, and attorneys’ fees. Courts scrutinize aggressive terms like full severance clawback for minor violations. Balance strong remedies with a reasonable scope for enforceability.
Understanding these components helps legal teams draft enforceable provisions and identify problematic language during AI contract review.
How enforceable are non-disparagement clauses in the US?
Non-disparagement clauses face increasing federal and state restrictions that vary by jurisdiction. So, how enforceable are non-disparagement clauses in practice?
Legal teams must navigate complex enforceability rules while protecting legitimate business interests.
1. The Speak Out Act (federal)
Effective December 2022, the Speak Out Act prohibits pre-dispute non-disparagement clauses related to sexual assault and sexual harassment.
According to the Speak Out Act’s legislative findings, 81% of women and 43% of men have experienced some form of sexual harassment or assault throughout their lifetimes, yet an estimated 87 to 94 percent of those who experience workplace sexual harassment never file a formal complaint, with Congress finding that non-disclosure and non-disparagement provisions perpetuate illegal conduct by silencing survivors while shielding perpetrators.
Employers cannot require employees to sign non-disparagement provisions about harassment or assault before a specific dispute arises.
In light of Congress’s findings that non-disclosure and non-disparagement provisions “can perpetuate illegal conduct by silencing those who are survivors of illegal sexual harassment and assault or illegal retaliation” and “shielding perpetrators and enabling them to continue their abuse,” the Speak Out Act makes such clauses judicially unenforceable in sexual assault or sexual harassment disputes where the conduct is alleged to have violated federal, state, or tribal law.
The restriction applies to employment contracts, offer letters, and handbooks. Post-dispute clauses in settlement agreements remain permissible if voluntarily negotiated. The Act affects pre-dispute language in agreements entered into before and after its enactment and does not carve out small employers.
2. State restrictions beyond federal law
Several states have enacted broader prohibitions beyond federal requirements. California restricts settlement provisions that prevent disclosure of information related to workplace harassment, discrimination, or retaliation claims.
Certain jurisdictions impose specific notice requirements and review periods for separation agreements, particularly those involving protected classes. Legal teams must ensure compliance where employees work, not just where the company is headquartered.
3. NLRB guidance on protected concerted activity
According to Goldenring Karmin Nimaroff LLP, the Ninth Circuit Court of Appeals issued a ruling emphasizing the serious legal risk for employers who prohibit workers from discussing their wages, benefits, and other compensation with each other, finding that disciplining workers for such discussions can violate federal labor law protections under the National Labor Relations Act.
The NLRA applies to most private sector employees, including non-union workplaces. Overbroad provisions that could chill discussions about employment terms risk NLRB challenges. Avoid blanket phrases like “any negative statement about the Company” that fail to carve out protected concerted activities.
4. Judicial scrutiny of overbroad provisions
Courts increasingly refuse to enforce clauses lacking specificity, containing no carve-outs for protected speech, or imposing disproportionate penalties. Clauses must balance legitimate business interests with employee rights.
Enforceability checklist:
- Required carve-outs for harassment, discrimination, and whistleblower reports
- Jurisdiction-specific compliance where employees work
- Reasonable scope avoiding NLRB Section 7 conflicts with protected concerted activity
- Clear consideration(such as severance payment) supporting the restriction
- Mutual obligations or justified one-sided rationale
Protect reputation rights without compliance risks
HyperStart’s AI flags non-compliant non-disparagement language and suggests jurisdiction-specific carve-outs automatically.
Book a DemoCourts generally enforce narrow, specific provisions with appropriate carve-outs. Contract compliance requires regular review as laws evolve.
Is telling the truth still disparagement?
Yes, and this distinction confuses many. Contractual non-disparagement obligations can prohibit truthful negative statements, unlike defamation law, which requires false statements.
The term “disparaging” is considerably more broad that the term “defamatory.” Although there are some variations in the parameters of the term “disparaging,” courts have found that it can mean “anything that detracts or discredits,” or “[t]o bring discredit or reproach upon; to dishonor, discredit; to lower in credit or esteem.” Perhaps the most consequential difference is many courts have held that statements can be disparaging even if truthful or non-defamatory.
A former employee posting “Company systematically ignored safety complaints” may breach a non-disparagement clause even if completely accurate. This creates tension: employees believe the truth should protect them, while employers argue contracts bind regardless.
The key is understanding what speech remains legally protected even under contract.
Non-disparagement clauses cannot restrict legally protected speech:
Protected activities that override clauses:
- Testimony in legal proceedings, depositions, and arbitrations
- Reports to EEOC, OSHA, SEC, state labor departments, and government agencies
- Whistleblower disclosures of illegal activity, fraud, violations
- Participation in government investigations
- Discussions protected under the NLRA Section 7 about wages, hours, and conditions
- Harassment and discrimination complaints(Speak Out Act)
- Responding to defamation or reputation attacks
Practical implications for employers
Well-drafted clauses include explicit carve-outs for protected activities rather than relying on general principles. Don’t use clauses to prevent employees from reporting violations to authorities, as attempting enforcement against protected whistleblower activity can trigger retaliation claims and penalties.
Practical implications for employees
While you can report illegal activity to appropriate authorities without breach, gratuitous public criticism about general business practices, management competence, or company strategy may still violate enforceable provisions. The distinction is purpose and audience: reporting violations to authorities is protected, broadcasting complaints on social media typically is not.
Legal teams should ensure contract clause libraries include updated carve-out language clearly preserving all legally protected speech.
Red flags for employees and contractors
From an employer’s perspective, understanding what employees view as problematic helps draft reasonable provisions that will actually get signed. Employees increasingly consult counsel before signing separation agreements, and attorneys focus on these specific issues.
1. One-sided restrictions
The clause binds only the employee while the company retains complete freedom. This imbalance signals unfairness.
Reasonable approach: mutual provisions with the company’s obligation limited to official communications from senior management and HR.
2. No carve-outs for legal rights
The clause lacks explicit exceptions for legally protected activities. Blanket “no negative statements” language may violate the Speak Out Act and state employment laws.
Reasonable approach: Include comprehensive carve-outs for all protected activities as detailed in the “Is telling the truth still disparagement?” section above. Use the phrase “Nothing in this clause prohibits or restricts” followed by an exhaustive list.
3. Vague unlimited scope
The clause prohibits “any negative statement” without defining disparagement or covered channels. This vagueness chills legitimate speech and may be unenforceable.
Reasonable approach: define disparagement as “public statements intended to harm reputation or business relationships” and specify covered channels.
4. Disproportionate penalties
Aggressive remedies like full severance clawback for any violation or liquidated damages of $50,000+ per breach. Courts view punitive enforcement terms skeptically.
Reasonable approach: proportional remedies tied to actual damages, escalating enforcement for repeated breaches, requiring material breach rather than technical violations.
During contract negotiation, frame non-disparagement provisions as mutual protection benefiting both parties. Offering reasonable mutual terms, explicit carve-outs, and proportional enforcement creates agreements employees will sign and courts will enforce.
How employers should draft non-disparagement clauses
Effective non-disparagement clauses balance reputational protection with legal compliance and practical enforceability. Legal teams should follow this framework when creating templates or updating existing contract drafting provisions.
1. Define disparagement specifically: Instead of prohibiting “any negative statement,” define disparagement as “public statements intended to harm reputation, business relationships, or professional standing.” This specificity helps courts determine whether particular speech violates the clause while preserving factual discussions.
2. Include comprehensive carve-outs: Explicitly preserve legally protected speech rights detailed in the “Is telling the truth still disparagement?” section above.
Use the phrase “Nothing in this clause prohibits, restricts, or interferes with Employee’s right to” followed by a comprehensive list. Reference the Speak Out Act explicitly and include state-specific protections where applicable.
3. Tailor scope to relationship and risk: Executive separations warrant broader mutual provisions covering all company representatives due to executives’ platform and influence. Routine employee separations may use narrower provisions covering only senior management on the employer side. Contractor agreements should focus on client relationships and trade secrets rather than general criticism.
4. Build proportional enforcement terms: Specify remedies tied to actual damages rather than automatic full severance clawback. Consider escalating enforcement: first breach triggers cease-and-desist letter, continued violations trigger partial clawback, repeated material breaches trigger full remedies.
Include dispute resolution provisions before litigation to reduce enforcement costs.
5. Ensure jurisdiction-specific compliance: Consult employment counsel on state-specific requirements before finalizing templates. Certain jurisdictions impose specific notice requirements, waiting periods, or restrictions on settlement confidentiality related to harassment and discrimination claims.
Build contract templates with jurisdiction variants rather than one-size-fits-all provisions. Regular legal review ensures continued compliance as state and federal employment laws evolve.
Well-drafted clauses protect legitimate business interests while withstanding legal challenges and employee negotiations.
Examples of disparaging vs non-disparaging statements
Understanding the practical boundary between prohibited and permissible speech helps employees, employers, and legal teams apply non-disparagement clauses appropriately.
Social media posts:
- Disparaging:”Former employer systematically violated OSHA regulations and ignored safety complaints. Management cared more about profits than worker safety.”
- Non-disparaging:”I worked at Company X for three years in the operations department.”
- Protected speech: Reporting safety violations to OSHA or testifying about them.
Review sites (Glassdoor, Indeed):
- Disparaging:”Incompetent leadership drove the company into the ground. CEO made terrible decisions that destroyed employee morale.”
- Non-disparaging:”Culture wasn’t the right fit for me. I left to pursue other opportunities.”
- Protected speech: Discussing wages, benefits, and working conditions under NLRA Section 7.
Public complaints about products/services:
- Disparaging(if former business partner):”Their product is defective and they knowingly sold faulty equipment to clients.”
- Non-disparaging: Filing warranty claims or returns through normal channels.
- Protected speech: Consumer reviews may be protected under Consumer Review Fairness Act.
Professional references and interviews:
- Disparaging: Volunteer negative opinions about former employer’s competence or ethics.
- Non-disparaging: Factual employment dates, title, general responsibilities when asked.
- Protected speech: Truthful testimony if called as a witness in legal proceedings.
Internal communications at new employer:
- Disparaging: Detailed criticisms of the former employer’s practices shared with new colleagues.
- Non-disparaging: General statements that you left for a better opportunity.
- Protected: Discussions necessary to perform the current job without revealing trade secrets.
Gray areas requiring legal guidance: Satirical or humorous posts, factual business reporting, and industry conference presentations about general practices without naming companies.
How to manage non-disparagement clauses with CLM
Legal and HR teams at growing companies face inconsistent non-disparagement language across dozens of templates and custom contracts, creating compliance risk and enforcement challenges.
Contract lifecycle management platforms solve these problems through systematic clause governance:
Central clause library for standardized variants: Legal teams maintain pre-approved non-disparagement provisions for different contexts, including executive separations, general employee terminations, contractor agreements, and business settlements. Each variant includes jurisdiction-specific carve-outs and a compliant scope.
HR and business teams select from approved options rather than drafting custom language.
AI-powered review flagging non-compliant language: When business teams negotiate custom terms or inherit legacy agreements, CLM platforms with AI contract review automatically identify problematic provisions. The system flags clauses lacking required carve-outs under the Speak Out Act, containing overly broad definitions, or including aggressive enforcement terms that courts have criticized.
Playbooks guiding clause selection: Automated contract workflows guide HR through appropriate clause selection based on employee level, jurisdiction, severance value, and termination circumstances. For example: “For separations in New Jersey, use Template NJ-2024-Mutual, which includes state-required carve-outs,” or “For executives receiving >$100K severance, require legal review of negotiated changes.”
Portfolio reporting on clause risk: Legal operations teams need visibility into where non-disparagement obligations exist, which agreements use outdated language, and where enforcement may be required. CLM platforms provide reporting answering: “How many active separation agreements include non-disparagement clauses?” “Which agreements lack Speak Out Act-compliant carve-outs?”
“What obligations apply to contractors with sensitive IP access?”
Contract management automation transforms non-disparagement clauses from a drafting issue into systematic governance, ensuring standardization, compliance, and portfolio visibility.
Close stronger non-disparagement clauses with less risk
Non-disparagement clauses serve legitimate business interests in protecting reputation, but they operate in an increasingly complex legal environment. The Speak Out Act, state restrictions, NLRB guidance, and judicial skepticism mean that clauses drafted five years ago may no longer be enforceable.
For legal and HR teams managing these clauses at scale, the challenge is maintaining consistency, compliance, and appropriate risk-based decision-making across hundreds of separations and settlements. Transforming ad hoc drafting into governed processes requires centralized clause libraries, automated review, and portfolio visibility.
HyperStart’s AI-powered contract lifecycle management platform helps legal operations and HR teams standardize non-disparagement language, automatically flag non-compliant provisions, guide appropriate clause selection through configurable playbooks, and provide executive visibility into clause risk. Transform scattered, inconsistent clauses into systematic reputation protection that’s legally compliant and business-appropriate.
