Our NY Severance Package Lawyer is often asked to provide some tips and pointers in severance negotiations and contract review. Most people just focus on the amount of severance pay in a separation package but the non-economic terms can be critical as well. Many employers include a non-disparagement provision in their severance agreements. In general, a non-disparagement provision prohibits individuals from making any statement or taking any action that negatively affects your former employer, its products and services, and employees. This provision can have long lasting consequences.
Absent a non-disparagement provision, an individual can exercise his or her first amendment right to free speech provided it is does not defamatory. The standard for defamation is much higher than for a violation of a non-disparagement provision. In general, in New York, an individual can be held liable for defamatory conduct if he or she makes a false statement to a third party with fault that amounts to at least negligence and that causes special harm of defamation per se. So, you may make statements that do not rise to this level; however, if you have signed a contract with a non-disparagement clause, your ability to speak freely is limited. One of the biggest benefits an employer obtains in a severance agreement is your promise, with limited exceptions, to never to sue for any claims that arose before their agreement’s execution. But, one of the other biggest benefits is your promise to not speak negatively about the company and, depending on the terms, its employees, officers, products, services, etc.
One of the key takeaways to understand is that the non-disparagement obligation, unlike a non-competition or non-solicitation clause, does not expire. That means you cannot make any negative statements going forward forever including on social media. Depending on your role, that can be difficult. For example, if you are in the journalism field or going to join a competitor or trade organization, this restriction may limit your activities. A second takeaway is to ask whether the non-disparagement obligation can be made to be mutual so the Company agrees to such a provision as well. Many companies push back on this issue; an experienced employment lawyer may be able to help you. Employees should be wary of provisions that include liquidated damages and penalty amounts for violations of a non-disparagement clause – these can be very problematic and draconian.
Severance agreements are important legal documents and you should consult with an experienced employment law attorney to understand your rights and post-employment obligations. Employees and employers both should exercise care in executing a non-disparagement provision. Improperly drafted non-disparagement agreements can have unintended consequences for employers. For example, if a clause is drafted too broadly, it could be in violation of an employee’s rights to engage in concerted activity under Section 7 of the NLRA. In recent years, the EEOC has started to scrutinize severance agreements closely including non-disparagement provisions, cooperation provisions and limitations on filing administrative charges. Employees and employers both should exercise care in executing a non-disparagement provision. If you have any questions about a severance agreement, contact our Award Winning NY Employment Lawyer for a confidential consultation.
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