Are non-disparagement clauses in employment NDAs legally enforceable?

Are non-disparagement clauses in employment NDAs legally enforceable?

Non-disparagement clauses are legally enforceable only if they are narrowly tailored and do not infringe upon federally protected rights. Recent National Labor Relations Board (NLRB) guidance and state-level legislation have significantly curtailed the ability of employers to use broad, indefinite gag orders in severance and employment agreements.

The NLRB Shift: The McLaren Macomb Standard

In February 2023, the NLRB issued a landmark decision in McLaren Macomb, which fundamentally changed how non-disparagement clauses are viewed. The Board ruled that offering an employee a severance agreement that includes broad non-disparagement and non-disclosure provisions is unlawful because it interferes with the employee's Section 7 rights under the National Labor Relations Act (NLRA).

What constitutes protected activity?

• Discussing wages, hours, and working conditions with coworkers.
• Filing complaints with the Equal Employment Opportunity Commission (EEOC) or the Occupational Safety and Health Administration (OSHA).
• Participating in union organizing or collective bargaining.
• Discussing the terms of a settlement or severance agreement with a labor board or government agency.

Key takeaway: If your agreement prevents you from discussing your working conditions or reporting potential legal violations to a government agency, that specific clause is likely unenforceable under federal law.

Action Item: Review your contract for "catch-all" language that prohibits "any negative comments about the company." If the clause does not explicitly carve out protected concerted activity, it may be legally vulnerable.

State-Specific Restrictions

Beyond federal law, several states have enacted aggressive legislation to limit the use of non-disparagement clauses, particularly in the context of sexual harassment and discrimination claims.

How to evaluate your agreement

1. Check for carve-outs: Does the clause explicitly state that it does not prohibit communication with government agencies?
2. Assess the scope: Is the definition of "disparagement" limited to false or malicious statements, or does it cover all negative feedback?
3. Identify the context: Is this part of a standard employment contract or a post-employment severance agreement?

Action Item: Cross-reference your contract against your state's specific labor code. If you are in a state like California, any clause that attempts to silence you regarding "unlawful acts" is void as a matter of public policy.

Red Flags in Non-Disparagement Clauses

When reviewing an NDA or severance agreement, look for these common indicators that a clause may be unenforceable or overly restrictive:

• Indefinite Duration: The clause lasts "forever" rather than a reasonable period (e.g., 12–24 months).
• Lack of Definition: The term "disparagement" is not defined, leaving it open to subjective interpretation by the employer.
• Broad Scope: It covers not just the company, but also "affiliates, officers, directors, and agents," effectively silencing you regarding any interaction with the entire corporate ecosystem.
• Financial Penalties: The agreement includes liquidated damages (e.g., "you must pay back your entire severance if you disparage us"), which courts often view as punitive and unenforceable.

Key takeaway: A clause that imposes a financial penalty for any negative comment is often viewed by courts as an illegal "chilling effect" on your right to free speech and protected labor activities.

Action Item: If you see a liquidated damages clause tied to a non-disparagement provision, consult with an employment attorney. These are frequently struck down as "unconscionable" penalties.

The Role of TermScore in Contract Analysis

Navigating the intersection of federal labor law and state-specific statutes is complex. TermScore uses advanced AI to instantly scan your employment agreements, identifying overbroad non-disparagement clauses and flagging language that conflicts with current NLRB standards or state-specific protections. By providing a clear, risk-based analysis, TermScore ensures you understand exactly what you are signing before you commit.