I’ve seldom, if ever, negotiated a separation or settled an employment dispute for an employer without insisting that the signed agreement include a nondisparagement clause. The reasoning is simple—it’s not in a company’s best interest to have a former employee running around bad-mouthing it or trashing its reputation.
The reality, however, is that a clause in a contract is only as good as one’s ability to enforce it after it has been breached.
That’s not as easy as it once was. In Ohio Education Assn. v. Lopez, an Ohio appellate court has removed a good deal of the bite from nondisparagement clauses in separation and settlement agreements.
A fateful phone call
The facts of Lopez are straightforward. When the Ohio Education Association (OEA) asked for the resignation of Christopher A. Lopez, its assistant executive director and general counsel, it offered Lopez a severance agreement, which he accepted. The agreement contained the following nondisparagement language, similar to what you will find in most such agreements:
Employee further agrees not to at any time disparage, defame, or otherwise derogate Employer’s Officers, Executive, Committee Members, employees or agents.
OEA sued Lopez for an alleged breach of that clause after he left the following voice mail for its outside attorney:
“Davey, you never call me anymore. This is el jefe. Call me sometime. I’m all settled with the OEA so you don’t have to worry about this gag order and all this s*** that slimebag Reardon said to you. So call me…. Bye.”
Dennis Reardon was the OEA’s executive director.
The court of appeals concluded that while the voice mail did breach the nondisparagement clause, the breach was immaterial and therefore not actionable.
Slimy maybe, not derogatory
The purpose of the separation agreement was to end the employment relationship and resolve all disputes. The nondisparagement provision was a negotiated term of the agreement.
The provision OEA alleged Lopez breached uses the terms “disparage, defame, or otherwise derogate.” All those terms connote harming a person’s reputation or causing one to seem inferior.
The court didn’t believe “slimebag” rose to that standard.
Citing McGraw-Hill’s Dictionary of American Slang and Colloquial Expressions, the court said “slimebag” is a common slang expression meaning “[a] despicable person, usually a male. … This kind of trifling figure of speech is of so little consequence it cannot be said to be material and should be disregarded. … [T]he slang expression is such a part of modern casual speech as to be almost meaningless. OEA could not demonstrate that the message caused any damage to OEA or Reardon.”
What employers must do now
Because this case requires a showing of actual harm to prove a material breach of a nondisparagement clause, it will make it that much more difficult to enforce these provisions.
Nevertheless, you should include a nondisparagement clause in any severance or settlement agreement because it:
- Establishes the expectation that former employees are to act professionally and businesslike when talking about your organization
- Protects your business from the malicious speech intended to cause real harm.
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