Non-Disparagement

Updated: 9/6/2016

A Non-Disparagement or Protection of Reputation clause restricts individuals from taking any action that negatively impacts an organization, its reputation, products, services, management or employees. They are found in virtually all settlement agreements and about a quarter of executive employment agreements. Some examples briefly describe the prescribed actions; others build a thesaurus-like list of prohibited actions.

Clause Language

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Neutral Standard

1. Non-Disparagement. During the Term and thereafter, Executive agrees to take no action which is intended, or would reasonably be expected, to harm the Company or its or their reputation or which would reasonably be expected to lead to unwanted or unfavorable publicity to the Company. However, the Executive shall not be prevented from making any truthful statement in connection with any legal proceeding or investigation by the Company or any governmental authority.

1. Non-Disparagement. [During the Term and thereafter,] [Employee] agrees to take no action which is intended, or would reasonably be expected, to harm the Company or its or their reputation or which would reasonably be expected to lead to unwanted or unfavorable publicity to the Company.


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Discussion

  1. First Amendment Rights

A non-disparagement clause is not precluded or voided by the Firest Amendment right to free speech. The parties to a contract are free to waive their First Amendment rights. See, FreeLife Int’l, Inc. v. Am. Educ. Music Publications Inc., 2009 WL 3241795 (D.Ariz. 2009).

  1. Vagueness and Enforceability

Even though the term "disparage" is vague, the courts have found the term enforcement. For example in FreeLife Int’l, Inc. v. Am. Educ. Music Publications Inc., Id, the Arizona court cited the Oxford English dictionary which defined disparage as “[t]o bring discredit or reproach upon; to dishonour, discredit; to lower in credit or esteem.” Oxford English Dictionary (2d ed. 1989). .... observes that "This rather scholarly definition seems as vague and slippery as the word itself. Nevertheless, the Court found the word to be “well defined” and “easily understood.” What the parties intended when they agreed to not disparage each other was for the jury, not the Court, to decide. 2009 WL 3241795, 6-7." What is a "Non-Disparagement" Clause and Why You May Not Want to Sign One, David Farren, Jaburg Wilk, 2005.

  1. Carve-Outs for Legal Proceedings

A large percentage of non-disparagement clauses in executive employment agreement include an exception for filing legitimate, but potentially disparaging claims with government agencies, such as the Equal Employment Opportunity Commission.


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