In February 2022, just before a sales representative and his former employer were about to start a jury trial over his claim of over $200K in unpaid sales commissions, the parties settled the dispute on confidential terms. In that case, Cause No. 19-E-0107 in the 130th Judicial District Court of Matagorda County, the sales rep […]Read More
You’ve been given a proposed severance agreement from your recent or soon-to-be ex-employer here in Texas. You may see a “non-disparagement clause” in your proposed severance agreement. It may say something to the effect that you, as the departing employee, will not say bad things publicly about the employer, as part of the exchange of value for the severance payment they are going to pay you if you sign the agreement. Below is general information about non-disparagement clauses in these agreements. Talk to an attorney for advice about your particular situation.
Can they really keep me from speaking out?
Some people think – well, what about my free speech rights? But those don’t apply. Free Speech under the United States Constitution just guarantees that you aren’t punished by the government for properly exercising your free speech rights. You can make this non-disparagement agreement with your former employer, the money they pay you can bind it, and it can be enforced against you if you violate it in a meaningful way. Remember, it’s your choice on whether you want to sign the severance agreement or not.
Where’s my non-disparagement clause?
The second thing the departing employee often asks is: “Well, what about the company not disparaging me?” That’s a fair question. Oftentimes, a non-disparagement clause will also include a statement that describes what the employee needs to do so that future potential employers get a neutral reference on the employee when they call your former employer to verify your employment. However, if that is not in the severance agreement, I have often advised employees to ask the employer to include it, or otherwise get something in writing (a simple email conversation is fine) from someone with authority on this (like the HR director) that says that a neutral reference is the company’s policy. That is typically good assurance that you will receive a neutral reference.
Sometimes the employee wants to ensure that no one still at the company talks bad about them. However, realistically, it’s just not feasible for a company to control what every one of its employees says at all times. It’s also not feasible (for many reasons) for a company to send a company-wide email that says: “Jane Smith has just left the company. We agreed that no one from the company would ever say anything bad about her, so you are instructed not to do so.” Therefore, employers won’t typically agree to this type of language. Sometimes, in a small startup in a niche industry for example, or other types of small companies, where the employee worked directly for the owner, the owner may agree to something like this for him or her personally, and that’s fine. But my experience is that larger companies will not. It’s just not feasible. So the neutral reference policy ends up being the employee’s version of getting a non-disparagement agreement from the employer.
Why are they including one at all?
Why does the employer include a non-disparagement clause? It’s pretty standard, and it doesn’t necessarily mean that the company is trying “silence you” in particular for some specific reason. Instead, typically, the company doesn’t want to pay you extra money so that you go off on your own way, but then only to see you trash the company on Glassdoor or something, for instance. They want to buy peace following your exit, and if you sign the severance agreement with a non-disparagement provision, you’re essentially agreeing to such peace. There are certain things that they can’t silence you on, like filing an EEOC charge of discrimination or reporting certain illegal activity – but those situations are limited. Talk to a lawyer if you are concerned in some way.
What are liquidated damages?
Some proposed severance agreements will talk about liquidated damages for a breach of the agreement – something like “The employee agrees that the harm to the employer is difficult to calculate in the event of the employee violating the non-disparagement clause, therefore, the parties agree that should it be shown in a court-of-law that the employee violated it, the employee shall be liable for $10,000” – or something like that. Or sometimes the penalty is the amount of the severance payment. I don’t like these provisions at all, because if there is a violation, the company has to typically show actual harm. The liquidated damages clause gives them a sort of free pass for not having to show that they were harmed. At the same time, in 10 years of representing employees, I have yet to see one of my clients sued for violating a non-disparagement clause, so if it’s your intention to comply with it, perhaps you may look past the issue and sign it anyway. I would consult an attorney if you have any concerns about it. Typically, the biggest concern is you posting something online – where it may stay forever, as evidence of your breach. At the same time, it is common in a private job interview to say a negative thing about a former employer to describe why you left. You will likely never see or hear of someone being sued for this, for many reasons, so while that may be a technical breach, practically speaking, it’s rarely a problem.
The O’Brien Law Firm is here for you.
As always, talk to a Texas board-certified employment lawyer about your concerns before acting on any of the general information above as a Texas employees. The O’Brien Law Firm reviews and consults on proposed severance agreements for Texas employees for a reasonable flat fee equal to around one hour of the attorney’s time. Contact us if we can help.
In August 2021, the O’Brien Law Firm took on a case where the firm’s client had already filed a Texas Workforce Commission wage claim that the TWC had 98% denied. Before the client’s TWC wage claim appeal hearing, the client reached out to the O’Brien Law Firm to take on the case at that point. […]Read More