Are non-disparagement clauses in NDAs void under state labor laws?

Are non-disparagement clauses in NDAs void under state labor laws?

Non-disparagement clauses are not universally void, but they are increasingly unenforceable. Recent federal rulings by the National Labor Relations Board (NLRB) and state-level legislation in jurisdictions like California, Illinois, and Washington have rendered broad non-disparagement clauses illegal when they restrict an employee's right to discuss working conditions or disclose unlawful acts.

The Federal Landscape: NLRB and Section 7 Rights

The primary federal challenge to non-disparagement clauses stems from the National Labor Relations Act (NLRA). Section 7 of the NLRA protects the rights of employees to engage in "concerted activities" for the purpose of collective bargaining or other mutual aid or protection.

The McLaren Macomb Precedent

In the 2023 decision McLaren Macomb, the NLRB ruled that an employer violates the NLRA by offering a severance agreement that requires employees to waive their rights to make public statements that disparage the employer. The Board reasoned that such clauses chill the exercise of Section 7 rights, as employees may fear that discussing their wages, hours, or working conditions could be construed as "disparagement."

Key takeaway: If your NDA or severance agreement is so broad that it prevents you from discussing your employment terms, it is likely unlawful under current NLRB guidance.

Action Item: Review your existing severance or separation agreements to see if they contain a "catch-all" non-disparagement clause. If it lacks a "carve-out" for protected concerted activity, it may be legally vulnerable.

State-Specific Restrictions: The "Silenced No More" Movement

Several states have moved beyond federal protections, enacting statutes that specifically target non-disparagement and non-disclosure agreements (NDAs) in the workplace.

California's SB 331

California’s "Silenced No More Act" is perhaps the most aggressive. It prohibits employers from requiring employees to sign any agreement that restricts the disclosure of information about unlawful acts in the workplace, including harassment and discrimination. Any clause that attempts to circumvent this is void as a matter of public policy.

New York's Procedural Requirements

New York does not necessarily void all non-disparagement clauses, but it imposes strict procedural hurdles. To be enforceable, the agreement must be provided in plain English, the employee must have 21 days to consider it, and they must have 7 days to revoke it after signing.

Action Item: If you are operating in a state with "Silenced No More" legislation, ensure your agreements explicitly state that the clause does not prevent the employee from reporting illegal conduct to government agencies.

Red Flags in Non-Disparagement Clauses

When reviewing a contract, look for these common indicators that a clause may be overbroad or unenforceable:

• Lack of Temporal Limitation: Clauses that last "in perpetuity" are often viewed as unreasonable by courts.
• Broad Definition of "Disparagement": Language that includes "negative comments" or "opinions" rather than just "defamatory statements."
• No Carve-outs: The absence of language protecting the employee's right to report violations to the EEOC, NLRB, or other regulatory bodies.
• Mutual Silence Requirements: Clauses that force the employee to remain silent while the employer retains the right to speak freely about the employee.

How to Evaluate Your Risk

To determine if your non-disparagement clause is problematic, follow this checklist:

1. Identify the Jurisdiction: Determine if your state has specific "Silenced No More" legislation.
2. Check for Carve-outs: Does the clause explicitly allow for reporting to government agencies?
3. Assess the Scope: Does the clause cover only "defamatory" statements, or does it attempt to muzzle all criticism?
4. Review Consideration: Was the clause part of a negotiated exchange, or was it a mandatory condition of employment?

Key takeaway: Courts are increasingly hostile toward "gag orders" that prevent employees from discussing workplace safety, discrimination, or wage theft. If a clause is too broad, a judge may strike the entire provision rather than just narrowing it.

Streamlining Contract Compliance

Navigating the intersection of state labor laws and contract language is complex, but you don't have to do it manually. TermScore uses advanced AI to instantly scan your contracts for non-disparagement clauses, identifying potential conflicts with state-specific statutes and federal NLRB guidelines. By highlighting high-risk language and suggesting compliant alternatives, TermScore helps you ensure your agreements are both enforceable and fair. Visit TermScore today to automate your contract analysis and mitigate your legal risk.