What Is a Nondisparagement Clause?

Employment Agreements

If you are being hired by a company or being given a severance package on your way out, you may be handed a number of forms to review and sign. One of them may be a contract, and part of that contract may include a nondisparagement clause. Its meaning depends on the particular wording, but generally, it is an agreement that you will not say or disclose anything that makes your employer or ex-employer look bad.

These clauses are common in settlement agreements when former employees raise legal claims. If you are laid off or fired, you may be offered a severance package of money and/or extended benefits. In exchange, you may need to agree to a nondisparagement clause.

These clauses are getting more attention because of the circumstances under which people are losing their jobs and signing these agreements. Many of those who sign agreements with nondisparagement clauses became unemployed because their jobs were outsourced to outside companies or foreign workers. The use of these foreign workers may violate federal immigration law, according to an article in the New York Times.

Companies defend these practices as a legitimate way to cut costs and stay competitive, making it easier for others to keep their jobs. But increasingly, employees who either did not sign these agreements or signed them but later ignored them are speaking out and putting human faces on this problem.

Laid-Off Employees Paid to Keep Quiet

labsOne person speaking out is Marco Peña, one of about 150 technology workers laid off earlier this year by Abbott Laboratories, a massive health-care conglomerate in Illinois. Their work is now performed by Wipro, a company based in India. Peña, a 12-year Abbott veteran, did not sign the offered severance agreement containing a nondisparagement clause, costing him about $10,000.

“I just didn’t feel right about signing,” Peña told the Times. “The clauses were pretty blanket. I felt like they were eroding my rights.” Part of the Abbott severance agreement stated, “You agree to make every effort to maintain and protect the reputation of Abbott and its products and agents.”

Peña said he could afford not to sign the agreement because he is single and has no children. “I was the only one with the ability to put my foot down,” he said. Peña received consistently good work reviews and a merit raise weeks before his layoff. Peña believed he lost his job so Abbott could cut costs.

One 13-year Abbott veteran told the Times that he was frustrated that he could not openly share his story, which he says includes preparing a 90-page manual for his foreign replacements so they would be able to do everything he used to do. He said he signed the agreement because he has a disabled child and his family needs the extended health benefits.

Stories of Losing Jobs and Being Unable to Talk About It Get Some Results

Leading members of Congress have been questioning these nondisparagement agreements because they potentially prevent (or at least discourage) workers from reporting wrongdoing or illegal acts by their former employers. Senators from both parties have proposed changes to visa laws to allow former employees to contest their layoffs when visa holders replace them. Former Abbott employees told the Times that the nondisparagement agreements prevented them from speaking openly with elected officials or appearing at congressional hearings.

Federal rules for temporary visas known as H-1Bs state they are supposed to be for foreigners with “a body of specialized knowledge” not readily available in the labor market. They are only to be issued if they will not undercut the wages or “adversely affect the working conditions” of Americans. But, according to the Times, loopholes in the rules have resulted in tens of thousands of American workers being replaced by foreigners on H-1B and other temporary visas.

In addition to Abbott Laboratories, other companies that transferred jobs to H-1B visa holders are reportedly Eversource Energy in Connecticut, Walt Disney World in Florida, Southern California Edison, Molina Healthcare in California, and Pfizer in Connecticut.

After publicity about the Abbott workers being replaced, only about 20% of the Wipro employees now doing the work are foreigners. Abbott also decided to have remaining employees train replacements instead of having those losing their jobs train those taking them.

Peña and 13 other former Abbott employees have filed federal claims claiming that they faced discrimination because of their age and American citizenship, according to a lawyer representing the group.

Summing It Up

If you are given a contract or form with a nondisparagement clause or other language that you do not understand, don’t sign it. Read it thoroughly, but tell your employer that you would like some time to think about it. Contact our office so we can discuss what the language means and how signing it, or not signing it, may affect you.

If you have already signed a contract with nondisparagement language in it and you want a further explanation, contact our office. You can comply with the contract or violate it with the understanding that you may suffer the consequences if you violate its terms.

If you believe you have lost your job to a foreign national holding a H1-B visa because you are an American, contact our office. Depending on the facts of the case, you may have been illegally discriminated against because of your nationality or citizenship. We can talk about what happened, how the law may apply, and how you can protect your rights.