Working through issues related to a separation of employment can be challenging. Negotiating a separation of employment agreement can be even more difficult if the departure is contentious. Employers are often confronted with the question of whether a non-disparagement clause should become part of the agreement.
In a recent Ohio decision by the Second District Court of Appeals, Green v. CDO Technologies Inc., the court considered whether an employer can be sued for breach of contract for disparaging remarks about a former employee where the settlement agreement between the employer and the former employee provided for a cash payment and a positive reference letter to the former employee. The settlement agreement contained a non-disparagement clause; however, it only committed the former employee not to disparage her former employer. The employer did not agree that it would not disparage the former employee. The former employee sued the employer alleging breach of the settlement agreement based on allegedly “disparaging, negative, erroneous or false statements” about her by one of her former managers. Affirming the trial court’s dismissal of the former employee’s lawsuit, the court of appeals held that the former employee got what she bargained for and that contracts must be construed as written. The employee was given the letter of reference called for in the agreement. But there was no broad non-disparagement clause binding the employer or its managers. The court was not willing to imply a broad non-disparagement restriction from the agreement to provide a specific positive reference letter.
Like the employer in this case, companies generally avoid committing to non-disparagement language due to the near-impossibility in enforcement. A clause that says “the company” will not disparage puts the company at risk based on things said by any company management representative. In light of Green, it is clear that non-disparagement terms applicable only to a former employee are enforceable and advisable. However, if employers find that agreeing to a mutual non-disparagement clause is necessary to get a deal done, it’s important to limit the employer’s non-disparagement obligation to only certain specified people and not the entire workforce. As always, it’s important to consult with counsel regarding the terms included within a separation or settlement agreement.