By Jon Hyman
Mar. 14, 2014
I'm a litigator. I prepare cases for trial, and, when all else fails, I try cases for businesses. Most people would think that I do my job best when a jury returns a verdict in favor of one of my clients. In that instance, it likely means I prepared the most, or argued the best, or thought the quickest on my feet in front of the judge or jury.
It does not, however, mean that I performed my job the best I can. In reality, I perform my job the best when I keep my clients outof court.
“That’s sacrilege,” you scream from the rafters. I respectfully disagree.
In the example where I take your case to trial and gain a defense verdict, your company has spent, on average, anywhere from $100,000 to $250,000 in legal fees (not counting the likely appeal). You’ve also tied up your business with the headaches, distractions and stress of pretrial conferences, document production and depositions, not to mention taking a huge risk that you might actually lose (no matter how well I do my job), costing your company even more.
On the other hand, if, before you terminate an employee, you call me, I might be able to save you the time, expense, aggravation and stress of a lawsuit, all for the cost of a phone call. Careful drafting of policies and agreements often achieves the same goal of keeping you out of court.
If a separation leaves bad blood between the parties, a nondisparagement clause is an easy way for a spiteful ex-employee or ex-employer to drag the other back into court.
Consider nondisparagement clauses in settlement and separation agreements. A nondisparagement clause restricts the parties to an agreement from speaking ill of the other. I hate them. OK, hate is a strong word. Let’s just say I detest how most people use them.
Yet, these clauses are exceedingly common in agreements. Familiarity, however, does not breed sensibility. They are hard to control, hard to enforce and encourage more litigation, not less. Thus, they fail my test of keeping my clients out of court.
Nevertheless, most employers insist on including these clauses in their agreements to hedge against the dead speaking ill of them.
For your consideration, here are three drafting points for your next nondisparagement clause:
1. Hard to control? Who does a nondisparagement clause bind? If it just says, “employer,” how does the agreement define “employer?” Even if you’re a small organization, can you control what Joe Coworker says about your departing employee, and do you want to have to advise every employee in your organization about potential nondisparagement obligations and control what they say? I have two suggestions to help ease the pain of this issue. First, define who, specifically, the clause covers; don’t leave it open-ended to bind your entire organization. Second, at least as job references are concerned, put some controls in place. Define who is to be contacted and what that contact-person is permitted to say. Even consider a predetermined script to limit any potential violations.
2. Hard to enforce? Most nondisparagement clauses say something like, “Employer [and Employee] agree not to disparage, or make any negative comments about the other,” which simply begs the question, what do “disparage” and “negative comments” mean? If you are serious about including this clause, define the terms. For example, your state will have a well-developed body of case law discussing and defining the meaning of defamation. This case law is a great starting point (and, maybe, end point) for this definition.
3. Encouraging litigation? If a separation leaves bad blood between the parties, a nondisparagement clause is an easy way for a spiteful ex-employee or ex-employer to drag the other back into court. Separation and settlement agreements are supposed to end the parties’ relationship and cease litigation, not act as a breeding ground for more. To cure this ill, tie a loser-pays clause to this provision. If a losing party has to pay everyone’s fees, one will think long and hard before exercising the right to sue for a breach of a nondisparagement clause. For this same reason, these clauses should be mutual, equally binding both sides.
Nondisparagement clauses are ripe for sloppy and vague drafting, which can result in parties ending up where they wanted to avoid — the courthouse. Following these three tips will help you shore up your language to create nondisparagement clauses that you can actually rely upon, and should, except in the most egregious of situations, discourage future litigation.
Jon Hyman is a partner in the Labor & Employment group of Kohrman Jackson & Krantz. Comment below or email email@example.com. For more information, contact Hyman at (216) 736-7226 or firstname.lastname@example.org. Follow Hyman on Twitter at @jonhyman.
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