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What is the role of a non-disparagement agreement?

On Behalf of | Aug 31, 2021 | Business Law

We live in an era where customers check out companies’ reputations before doing business with them. A negative review may lead a customer to your competitor’s doorstep instead of to you.

Negative reviews don’t just come from customers. Employees and former employees have plenty of places online to speak out about a company. Customers may not want to do business with a company that doesn’t treat its employees right. An increase people saying negative things about employers has led more employers to ask their workers to sign non-disparagement agreements.

Many new hire employment contracts now include non-disparagement clauses in them. They prohibit workers from saying anything negative about the products you sell, your customers, their employment experience with you or anything else about your company that they may feel inclined to share publicly.

Why should employees sign non-disparagement agreements?

Companies spend a lot of time growing their customer base and cultivating relationships with suppliers or business partners. Their continued success is largely contingent upon their ability to preserve their good reputation.

As you might imagine, words can travel fast on social media. All it takes is one employee perhaps inaccurately characterizing your workplace as toxic to greatly impact your ability to recruit new staff members. Many non-disparagement agreements are written to remain in effect long after an employee parts ways with their employer.

You shouldn’t fret if you didn’t think to have an employee sign such an agreement when you hired them. You might ask them to sign a non-disparagement clause when they leave your company. Some employers have conditioned an employee’s acceptance of a severance package on signing a non-disparagement agreement.

Non-disparagement agreements aren’t always enforceable. A worker may lawfully breach it, if needed, to comply with government-led worker safety, regulatory and ethics investigations.

There are many benefits associated with having employees sign non-disparagement agreements. You’ll want to ensure that its drafting complies with all applicable laws before presenting it to anyone to sign.