Settlement agreements with non-disparagement clauses

Recently I read something about non-disparagement clauses in settlement agreements. I’d better pass it on to you.

I’ve written about this type of clause several times and opined that they can only be demanded by the guy with the upper hand, i.e., the one who holds in abeyance the settlement money until the agreement with a non-disparagement clause is signed.

Of course, as Will Blythe proved, you can’t really demand a non-disclosure/non-disparagement clause if you’re not providing enough money to cause the person a conflict between his integrity and his need for money. As Will Blythe’s ex-employer discovered, a couple of weeks severance is not going to buy you a non-disparagement clause.

And if you’ve got a negotiation going on — or a lawsuit in process — with someone who is winning, i.e., has the upper hand, you’ve got nothing to bargain with. I mean, if the other person has shown no inclination to settle, what exactly is your grandiose offer? “I’m willing to settle this case as long as you sign a non-disparagement agreement,” and your opponent is saying, “Are you nuts? I’m not settling this case. I’m winning it!”

Regardless of all that, what I read reminded me that non-disparagement/non-disclosure clauses apply primarily to employment cases. The employer wants to make sure that you, the employee, will not co-opt his clients, take his files and strategies and/or perhaps get a job with someone in the same business, bringing everything you learned about widgets to the competition, who also makes widgets.

At the moment, I can’t think of another situation for which a non-disparagement clause would be part of a settlement agreement. And I just found this report on a recent NLRB decision that found one particular non-disparagement/non-disclosure clause to be illegal.

So unless you (a) employ the person with whom you want to settle and (b) have the upper hand in the money department, don’t waste your time thinking of non-disparagement clauses.

UPDATE 9/30/2015. What is a widget anyway?

 

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