Businesses are increasingly dependent on having a good reputation in the market-place. Moreover, as the labor market tightens, having a good reputation as an employer and as a place to work is becoming increasingly important. As such, many businesses are now asking whether they need non-disparagement agreements with their employees to restrict posting of salaries and/or working-environment reviews on websites such as Glassdoor.com.

Breach of Non-Disparagement Agreement vs. Defamation

Under current California law, your business can sue existing or former employees if they post reviews or “yelp-type” information on Glassdoor.com (or elsewhere) if what is posted is:

  • A false statement that is;
  • Maliciously or recklessly posted to cause harm and if; and
  • The published false statement causes actual damage to your business.

This is what is commonly called “business defamation.” Among other things, “truth” and “just-my-opinion” are both possible legal defenses to a defamation claim.

By contrast, a non-disparagement claim is a breach of contract claim. To prove that, your business would show:

  • Employee signed a non-disparagement agreement;
  • Employee made disparaging comments on a “yelp-like” website or elsewhere; and
  • Employee comments were disparaging and therefore breached the agreement.

Because a non-disparagement agreement is a contract, you and your experienced corporate lawyer can add language helpful to your company. For example, the non-disparagement agreement can provide for injunctive relief such as requiring the removal of the post by the employee. The agreement can also eliminate the “just-my-opinion” defense and the “actual injury” defense by providing for liquidated damages. Furthermore, the agreement can have an attorneys’ fee shifting provision whereby, if your company succeeds in the lawsuit, your former employee will have to pay your fees and litigation costs. The agreement can also simply prohibit the employee from posting on certain websites and social media.

On the down-side, non-disparagement agreements are getting a bad rap in the media lately. You probably remember that California prohibited use of non-disparagement clauses in consumer contracts. Illinois just passed a similar law. However, those laws do not impact employment agreements.

A Few Tips on What to Include

 If you think your business needs non-disparagement agreements with your employees, here are a few tips on what to include:

  • List the “who” — e.g., “… shall not disparage the Company or any of its officers, directors, or employees [etc.]…”;
  • List the “what” — e.g., “… shall not disparage the Company’s salary or wage structure, its working environment, its Employee Handbook [etc.]…”;
  • Define non-disparagement — e.g., “For purposes of this Agreement, ‘disparage’ shall mean any negative statement, whether written or oral, about …. “;
  • List the “where” or consider blanket prohibitions — for example: “Employee shall not make any postings on … “;
  • Eliminate the defenses- see above;
  • Provide for Injunctive relief, attorneys fees, and similar- see above;
  • Clearly state that non-disparaging behavior is material, important, and a condition of employment;
  • Tell your employees up-front- and have them agree- that you will be monitoring their social media; and
  • Consider requiring arbitration.

When to Obtain Your Non-Disparagement Agreement?

 The best and easiest time to obtain a signed non-disparagement agreement is at the time of hiring. This is wise for several reasons:

  • Your company is protected during the employee’s course of employment;
  • A pleasant separation can be maintained since you do not have to ask for a non-disparagement at the end;
  • Further antagonism of an angry employee can be avoided in a firing situation; and
  • It avoids having to “pay” for the non-disparagement agreement as part of any sort of post-firing settlement

Contact San Diego Corporate Law

 For further information, please contact Michael J. Leonard, Esq., of San Diego Corporate Law. Mr. Leonard has the experience to help draft and implement non-disparagement agreements and all other types of business contracts. Contact Mr. Leonard by email or by calling (858) 483-9200.

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