TL;DR: Non-disparagement clauses used to be the quiet workhorses of settlement agreements and executive separations, until the NLRB’s McLaren Macomb decision in 2023 blew the doors off. Now, any non-disparagement provision that could chill an employee’s Section 7 rights is presumptively unlawful in the employment context. But these clauses remain alive and well in commercial deals, partnership dissolutions, and M&A transactions. The real drafting challenge is threading the needle between meaningful protection of reputation and the growing body of law - constitutional, statutory, and regulatory - that limits what you can actually prohibit someone from saying. Get the carve-outs wrong, and you have an unenforceable clause that gives false comfort. Get them right, and you have a powerful tool that deters the kind of public mudslinging that can destroy brand value overnight.
What Is a Non-Disparagement Clause?
A non-disparagement clause is a contractual provision that restricts one or both parties from making negative, critical, or derogatory statements about the other party, its officers, directors, employees, products, or services. Unlike confidentiality clauses - which protect specific information - non-disparagement provisions target the tone and effect of public and private communications. They are fundamentally reputation-protection mechanisms.
These clauses appear most frequently in settlement agreements, employment separation packages, executive employment agreements, partnership and LLC operating agreement buyouts, M&A purchase agreements (particularly where the seller remains involved post-closing), and commercial contracts where brand association matters. The scope can range from narrow (prohibiting statements to media outlets) to extraordinarily broad (covering any communication to any person or entity, including social media posts, Glassdoor reviews, and even private conversations).
The enforceability of non-disparagement clauses turns on a handful of variables: mutuality (is the obligation bilateral or one-sided?), specificity of the prohibited conduct, the existence and breadth of carve-outs, the remedy structure, and increasingly the regulatory environment governing the parties’ relationship. A clause that is perfectly enforceable in a commercial asset purchase may be void as applied to a departing warehouse worker.
Why It Matters
Key Elements of a Well-Drafted Non-Disparagement Clause
Market Position & Benchmarks
Where Does Your Clause Fall?
Market Data
Sample Language by Position
Company-Favorable: “Employee shall not, directly or indirectly, make, publish, or communicate any statement, whether written, oral, electronic, or otherwise, that disparages, criticizes, or reflects negatively upon the Company, its affiliates, or any of their respective officers, directors, employees, agents, products, or services. This obligation shall survive in perpetuity. Any breach of this provision shall entitle the Company to recover liquidated damages of $100,000 per occurrence and to recoup all severance payments made hereunder.”
Balanced: “Each Party agrees that it shall not, and shall cause its officers and directors not to, make any public statement that disparages or is intended to damage the reputation of the other Party or its affiliates. Nothing in this Section shall restrict either Party from (a) making truthful statements in connection with any legal proceeding, government investigation, or regulatory inquiry; (b) engaging in protected concerted activity under Section 7 of the National Labor Relations Act; (c) communicating with any federal, state, or local governmental agency or commission; or (d) making truthful statements as required by law or regulation. This obligation shall continue for a period of three (3) years following the Effective Date.”
Counterparty-Favorable: “During the twelve (12) months following the Separation Date, Executive agrees not to make any public statement to media outlets or post on social media platforms any statement with the primary intent and effect of damaging the Company’s business reputation. This provision does not restrict Executive from making any truthful statement, providing honest reviews of the Executive’s employment experience, or engaging in any activity protected by law.”
Example Clause Language
Settlement Agreement: “The Parties agree that neither Party, nor any of their respective agents, representatives, or affiliates, shall make any disparaging or defamatory statements, whether written or oral, regarding the other Party, the underlying dispute, or the terms of this Settlement Agreement. For purposes of this Section, ‘disparaging statements’ means any communication that a reasonable person would consider to be harmful to the reputation, goodwill, or commercial interests of the other Party. Notwithstanding the foregoing, nothing herein shall prohibit either Party from (i) responding truthfully to any legal process, subpoena, or governmental inquiry; (ii) making statements required by applicable law or regulation; or (iii) communicating with legal counsel regarding this Agreement. Any breach of this provision shall be deemed a material breach of this Agreement, entitling the non-breaching Party to seek injunctive relief and to recover damages, including reasonable attorneys’ fees.”
Executive Employment Agreement: “During the Term and for a period of twenty-four (24) months following the termination of Executive’s employment for any reason, Executive shall not, directly or indirectly, disparage the Company, its products or services, or any of its current or former officers, directors, or employees. The Company shall instruct its senior officers and members of its Board of Directors not to disparage Executive during the same period. This Section shall not be construed to prohibit Executive from (a) engaging in any activity protected by Section 7 of the National Labor Relations Act; (b) filing a charge with or communicating with the EEOC, NLRB, SEC, or any other federal, state, or local agency; (c) testifying truthfully in any judicial, arbitral, or administrative proceeding; or (d) making any disclosure required by law. Executive acknowledges that a breach of this Section would cause irreparable harm to the Company and that the Company shall be entitled to seek temporary and permanent injunctive relief in addition to any other remedies available at law or in equity.”
M&A Purchase Agreement (Seller Non-Disparagement): “For a period of five (5) years following the Closing Date, Seller and each Key Principal shall refrain from making any statement or engaging in any conduct that disparages or is reasonably likely to harm the reputation, goodwill, or business relationships of the Company, the Buyer, or any of their respective affiliates, officers, directors, or employees. Seller acknowledges that this covenant is a material inducement to Buyer’s agreement to consummate the transactions contemplated hereby and that the Purchase Price reflects, in part, the value of the goodwill protected by this provision. Nothing herein shall prevent Seller or any Key Principal from making truthful statements in response to legal process or as required by law.”
Common Contract Types
Negotiation Playbook
Key Drafting Notes
Common Pitfalls
Jurisdiction Notes
United States: Enforceability varies significantly by state and context. California courts apply heightened scrutiny to non-disparagement clauses, particularly in employment contexts, and the state’s robust anti-SLAPP statute (Code of Civil Procedure § 425.16) can be used to strike enforcement actions. The NLRB’s McLaren Macomb decision applies nationally to non-supervisory employees, and the General Counsel has signaled intent to extend the reasoning more broadly. The SEC’s Rule 21F-17 prohibits provisions that impede communications with the Commission. Several states, including California (Civil Code § 1670.8) and Illinois, have enacted statutes specifically restricting non-disparagement clauses in consumer contracts. In the M&A and commercial context, non-disparagement clauses remain broadly enforceable when properly scoped and supported by adequate consideration.
United Kingdom: Non-disparagement provisions are generally enforceable in commercial agreements under freedom-of-contract principles. In employment contexts, settlement agreements (formerly compromise agreements) routinely include mutual non-derogatory statements clauses. However, such provisions cannot prevent workers from making protected disclosures under the Public Interest Disclosure Act 1998 (whistleblowing legislation) or providing information to regulatory bodies such as the FCA or SRA. The Equality Act 2010 also limits the enforceability of clauses that could prevent individuals from reporting discrimination or harassment. Courts will generally enforce reasonable non-disparagement obligations but may decline to grant injunctive relief where damages are an adequate remedy.
European Union and Other Jurisdictions: EU member states generally permit non-disparagement clauses in commercial agreements but impose significant restrictions in employment contexts. Germany’s strong employee protection regime and works council requirements can limit the scope and enforceability of post-employment speech restrictions. France’s labor code provisions on freedom of expression create additional constraints. Under GDPR, non-disparagement clauses cannot be used to prevent data subjects from exercising their rights or filing complaints with supervisory authorities. In Australia, non-disparagement clauses must comply with the Australian Consumer Law’s prohibition on unfair contract terms, and the Fair Work Act limits restrictions on employee communications. In the Middle East, particularly in the UAE and Saudi Arabia, non-disparagement provisions in commercial agreements are generally enforceable, but criminal defamation laws may provide an alternative (and sometimes more potent) enforcement mechanism for reputational harm.
Related Clauses
This glossary entry is provided for informational and educational purposes only and does not constitute legal advice. Non-disparagement clause enforceability is highly context-dependent and varies by jurisdiction, regulatory environment, and the nature of the underlying relationship. The regulatory landscape, particularly regarding employment-related non-disparagement provisions, is evolving rapidly. Consult qualified legal counsel before drafting, negotiating, or attempting to enforce any non-disparagement provision.
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