A Long History Of Serving This Community

Should I put a non-disparagement clause in my contracts?

On Behalf of | Nov 18, 2022 | Business Formation & Planning

New Jersey business owners know that having loyal, happy employees and a good reputation are both important.

Strong employment contracts are a major component of keeping your business running smoothly. You may have employees sign contracts when they begin or end employment, or both.

You hope that your employees will have good things to say about your business and their time spent working for you. This is understandable, since word of mouth is one of the biggest factors that affects a business’s reputation.

What is a non-disparagement clause?

This may lead you to wonder if you should put a non-disparagement clause in your contracts. A non-disparagement clause is a clause stating that your employees cannot say anything negative about you or your business to anyone, ever.

Non-disparagement clauses are meant to be extremely clear. They cover all forms of communication and apply to everything about the business, including its leadership, products or working conditions.

How is a non-disparagement clause breached?

It can be difficult to determine exactly what type of speech legally constitutes breaching a non-disparagement clause.

For example, your employee cannot post something on social media calling you names or saying that your business is unethical. But what if your employee tells a friend in private that they didn’t like how they were scheduled to work overtime one day?

While technically the non-disparagement clause would cover the comment made to the friend, this assumes that you would even know about the comment, and if so, if you would care. It is likely not going to be worth anyone’s time, cost and effort to litigate over a private comment about an isolated incident.

Help and guidance are available

However, you should be prepared to deal with gray areas when it comes to interpretation of a non-disparagement clause. Experienced business attorneys can draft contracts and provide advice when a potential contract dispute arises.