Billion-Dollar Bullies & Non-Disparagement Clauses

[Shared with permission.]

THE STORY

This week, one of my clients received a cease and desist letter (C&D) from her former employer, a multi-billion-dollar company. The letter claimed that certain general statements on my client's business website and LinkedIn "About Me" section allegedly disparaged the former employer. I take disparagement seriously. But this was utter BS.

The backstory: My client left her former company after enduring multiple instances gnarly gender discrimination. Instead of suing her employer, she negotiated her exit. The separation agreement she signed contained a non-disparagement clause, which the company is now using to harass and intimidate her as she grows her new business.

Disparagement is in the eye of the beholder. That said, it requires substantial mental gymnastics to reach disparagement based on the content cited in the C&D. My client's website and LinkedIn bio do not mention her former employer. She was careful with her words and has no intention of disparaging her former company. She was employed by the company for decades and still has many friends there. And until she received the baseless C&D, she was proud to be connected to the company.

My client's new business focuses on elevating women in the corporate world. The content alleged to be disparaging included general statements about (1) her experience with the hurdles and biases women face in business, (2) the fact that most of the decision-makers in her former industry are men and how that impacted her career, and (3) that she often felt her voice was silenced. I'm talking about general statements that describe common experiences of women, which are well-known and extensively written about, confirmed by numerous studies, and apply to 99% of organizations in my client's former industry. My client shared her personal experience to relate to and to connect with future clients, not to disparage her former company. I’ll repeat: my client did not attribute her experience to a specific company or organization.

I'm left questioning the judgment of the decision-makers at this multi-billion-dollar organization. (Also, they have nothing better to do?) Sure, there are times when a company must enforce a non-disparagement agreement, but this is not one of them. I told my client she should be flattered that her former company recognizes the power of her voice. It’s about time.

Here's the real kicker, though. The company's website lauds its "commitment to the advancement of women" and details the efforts they have undertaken to promote women within the organization. How ironic (and insidious) that they are now trying to muzzle one of those women. The thing is, when we're talking about authenticity, the truth always comes out—non-disparagement provisions notwithstanding.

THE LAW

Non-disparagement clauses are broadly enforceable in most state and federal courts. And, proving disparagement (unlike defamation) is easier than you might think. That’s because disparagement is broader than defamation, libel, and slander. Defamation typically involves a false statement and requires some degree of malicious intent. Disparagement, by contrast, can occur even if the statement is true. Explaining it another way, defamation is: “don’t invent harmful things about us to hurt us,” and disparagement is: “don’t say harmful/negative things about us, even if they’re true.”

Because disparagement is relatively easy to prove, it is crucial to consider the ramifications of a non-disparagement provision before signing an agreement containing one. Although disparagement usually is not difficult to establish, proving any damages caused by the alleged disparagement can be challenging. That’s why disparagement clauses sometimes are tied to a liquidated damages provision. With liquidated damages, the parties to a contract agree in advance to a specific amount of damages. For example, a severance or settlement agreement could specify that the parties agree that the amount of liquidated damages for any breach of the non-disparagement clause in the agreement is $50,000. Or, a severance or settlement agreement containing a non-disparagement clause could specify that if the employee disparages the company, she must pay back any severance or settlement monies received—harsh, I know.

It is incredibly important to know your rights relative to agreements containing non-disparagement provisions. The first thing you need to know is that you don’t have to agree to including a non-disparagement provision in a contract you are being asked to sign—you can (and should) negotiate this. The second thing you should know before signing any contract containing a non-disparagement provision is that some states, like New York, have significantly limited the scope of non-disparagement and non-disclosure clauses in settlement and separation agreements involving discrimination, retaliation, and harassment claims. Additionally, the federal Speak Out Act renders unenforceable pre-dispute non-disparagement and non-disclosure clauses related to allegations of sexual assault and sexual harassment. And in 2023, the National Labor Relations Board (NLRB) ruled that broad non-disparagement and confidentiality clauses in severance agreements, which restrict an employee's rights under section 7 of the National Labor Relations Act (NLRA), are illegal.

One final consideration—in some instances, a mutual non-disparagement clause might be appropriate—and you can request one. In mutual non-disparagement provisions, the consideration (which means the value given and received) is the mutual promises of the parties to not disparage the other.

THE DECISION

I walked my client through her options:

• Option 1: Ignore the C&D. Not advisable.

• Option 2: Respond to the C&D and make her record that she doesn’t agree with the company’s characterization of the content as disparaging, assert her right not to remove the content, and reserve her right to pursue any and all remedies available to her in the event the company continues to harass her.

• Option 3: Respond to the C&D, make her record that she doesn’t agree with the company’s characterization of the content, advise the company that she removed the content, and reserve her right to pursue any and all remedies available to her in the event the company continues to harass her.

She chose Option 3. She appreciates that disparagement can be relatively easy to prove, even if it was highly unlikely that her company could point to (or prove) any damage resulting from the content. She made her decision from a position of strength, knowledge, and clarity. My client isn’t one to back down from a fight (particularly when she's right), but this one isn't worth it. She has no time for the petty power play of a billionaire bully. She's building a badass business