It’s often preferable to rely on a neutral reference provision rather than a non-disparagement clause in a separation agreement, but if you do include a non-disparagement clause, you can avoid troublesome ambiguity in the language by keeping your obligations as the employer separate from what the employee agrees to do, say Michael Arnold and Kevin Kim of Mintz.
With a neutral reference provision, you’re simply agreeing to say nothing about someone’s employment at your organization after they leave other than the basic facts, like the hire and termination dates.
If you go beyond that and include a non-disparagement clause, you can run into trouble if you’re not clear on the employee and employer having the same non-disparagement obligations, say the Mintz lawyers.
The U.S. Court of Appeals for the District of Columbia Circuit recently sent back to the circuit court a case, Wright v. Eugene & Agnes Meyer Foundation, in which a former employee accused her then-employer of breaching its contractual obligation not to say negative things about her tenure at the organization.
In the separation agreement, the organization agreed to send a directive to employees not to say disparaging things about former employee Terri Wright, who in turn, agreed not to say disparaging things about the organization.
A month after the agreement was signed, the organization’s CEO said disparaging things about Wright to another organization executive, triggering the lawsuit.
The circuit court sided with the organization on the grounds that it only agreed to send a directive to certain employees. As long as the directive was sent, the obligation was met whether or not someone actually said something disparaging about Wright.
In reversing, the appeals court said that, when the contract is looked at as a whole, the language can be read to mean the obligations of the two sides are the same, for three reasons: the provision comes with a header that says “Mutual Non-Disparagement,” the two sides of the obligation are separated by the word “likewise,” and the employer is subject to a clause that says the obligation doesn’t prevent the organization from making truthful disclosures about Wright’s performance to a government entity in litigation or arbitration.
When these factors are considered together, it points to the two sides of the obligation being the same, the court said. The point about truthful disclosures in the event of litigation, for example, wouldn’t be needed if the employer wasn’t obligated not to disclose anything about the former employee.
“If the contract’s sole obligation on the Foundation and its personnel was for an anti-disparagement directive to issue—and no one’s negative speech about Wright was contractually curtailed—then this carve out is pointless and serves no purpose,” the court said. “Courts … cannot read one part of a contractual clause to render the next sentence a nullity.”
To avoid this kind of trouble when you draft a severance agreement, Arnold and Kim say, include a provision to clarify that the headings used to identify each provision have no substantive meaning or interpretive value. Doing that would prevent a heading like “Mutual non-disparagement” from being read as part of the substance of the agreement.
You can also separate the employer’s portion from the employee’s portion of the non-disparagement provision, reducing the ambiguity over whether or not they’re linked together.
And you can add language that says that, beyond sending the directive about not making disparaging remarks, the employer has no further contractual obligation.
Lastly, you can include a construction provision, where appropriate, to clarify that both parties engaged in the preparation of the contract and that any ambiguities should not be construed against the drafter – i.e., the employer.
Before you get to this point, though, you might rethink your use of non-disparagement clauses in the first place.
“Oftentimes a neutral reference provision may, by itself, be sufficient,” the Mintz lawyers say. “But if one is needed, an instruction to a very limited set of specified employees remains a preferred approach.”