Severance Offer With a Non-Disparagement Clause: What Am I Giving Up?

What the clause usually says

A typical clause prohibits you from making any statement that disparages, criticises or reflects negatively on the company, its products, and often its officers, directors and employees. It commonly has no end date, applies to statements in any medium including private conversations and social media, and is backed by a clawback or liquidated damages provision.

Why it matters more than it looks

• It can restrict honest reviews on employer review sites.
• It can make it risky to explain to a prospective employer why you left.
• It can cover truthful statements, not just false ones.
• It can last indefinitely.
• A breach can cost you the severance you received.

What it cannot stop you doing

Some rights cannot be waived in a severance agreement, whatever the clause says:

• Reporting possible legal violations to government agencies, including the EEOC, SEC, OSHA and state agencies. SEC rules prohibit agreements that impede communication with the SEC about possible securities violations.
• Testifying truthfully in legal proceedings or when required by law.
• Participating in a government investigation.
• Filing a charge of discrimination.

Protections for many non-supervisory employees

In 2023 the National Labor Relations Board held that severance agreements with broad non-disparagement and confidentiality clauses can unlawfully restrict the rights of non-supervisory employees under federal labor law. How that decision is applied has shifted with changes at the Board, so its practical effect may change, but it is one reason employers now frequently include carve-outs.

Separately, the Speak Out Act makes pre-dispute non-disparagement and non-disclosure clauses unenforceable in relation to sexual harassment and sexual assault disputes. It applies to clauses agreed before a dispute arose, so its effect on a severance agreement signed after a dispute depends on the circumstances.

Mutual versus one-way

Most clauses bind only the employee. It is reasonable to ask for mutuality: that the company will instruct named senior leaders not to disparage you, and that it will provide a neutral reference confirming your dates and title. A company cannot realistically bind every employee, but it can bind its executives and control its official statements.

A worked example

Jenna is offered twelve weeks of severance. The agreement includes a permanent non-disparagement clause and requires repayment of the full severance for any breach. She is considering leaving an honest review of her experience on an employer review site.

Before signing, Jenna asks for three changes: a two-year term, a mutual obligation for named executives, and an explicit carve-out for truthful statements to government agencies and in legal proceedings. The employer agrees to the carve-out and the mutual obligation but keeps the term. She now knows exactly what she is agreeing not to say, and for how long.

What to negotiate

• A fixed term, such as one to two years.
• Mutuality, covering named executives and official company statements.
• Explicit carve-outs for protected activity and truthful testimony.
• A neutral reference and agreed internal and external messaging about your departure.
• Removal or reduction of the severance clawback for any breach.

Sample wording you can send

“I’m willing to agree to a non-disparagement obligation. Could it be made mutual as to [named executives], limited to two years, and include an express carve-out for truthful statements to government agencies, in legal proceedings, and as otherwise protected by law? I’d also ask for a neutral reference.”

Common mistakes

• Signing without reading the repayment consequences of a breach.
• Assuming the clause only covers false statements.
• Not asking for a neutral reference at the same time.
• Forgetting that many severance agreements give you time to consider them, and sometimes to revoke after signing.

Your time to review, if you are 40 or older

Federal law gives extra protection when a severance agreement releases age discrimination claims. Employees aged 40 or over must generally be given at least 21 days to consider the agreement, or 45 days if the separation is part of a group layoff, and 7 days after signing to revoke it. Many employers give similar periods to everyone. Use that time to read the non-disparagement clause properly rather than signing on the day.

Social media, reviews and conversations

Clauses usually cover statements in any medium, which includes social media posts, comments, employer review sites and private conversations that could be repeated. The practical risk comes less from lawsuits than from a former employer finding a post and asserting a breach to recover severance. If you intend to leave a review, the safest course is to negotiate the clause first, or to keep any statement factual and within what the clause permits.

What counts as disparagement

Many clauses define disparagement broadly enough to include truthful but negative statements. Truth is not always a defence to breach of contract, even though it is a defence to defamation. If the clause does not limit itself to false statements, assume it covers honest criticism too, and consider asking for a narrower definition.

Confidentiality of the agreement itself

Severance agreements often pair non-disparagement with a clause keeping the terms of the agreement confidential. That usually lets you share the terms with your spouse, tax adviser and lawyer, but not more widely. Check the confidentiality clause has the same protected-activity carve-outs as the non-disparagement clause, and that it allows you to disclose what is needed for tax purposes and to government agencies.

What happens if you breach

A breach can lead the employer to demand repayment of severance, to claim damages, or to stop any remaining severance instalments. Some agreements set a fixed sum as liquidated damages. Courts will not always enforce a sum that operates as a penalty, but the risk of losing severance you have already received is real. That is why narrowing the clause before signing is far more effective than arguing about a breach afterwards.

Quick checklist

• Note how long you have to consider and revoke the agreement.
• Check the duration and scope of the non-disparagement clause.
• Check for carve-outs for protected activity and truthful testimony.
• Check the consequences of breach, including any severance clawback.
• Ask for mutuality and a neutral reference.
• Check whether the severance reaffirms any non-compete.
• Get agreed changes written into the final agreement.

Key terms explained

These are the terms you are most likely to meet in the clause itself and in any correspondence about it, explained in plain English so you can read your own contract with confidence.

• Non-disparagement: a promise not to make negative statements about the other party.
• Release: your agreement to give up legal claims in exchange for severance.
• Protected activity: actions the law protects, such as reporting violations to government agencies.
• Mutuality: an obligation applying to both sides.
• Clawback: a requirement to repay severance if you breach the agreement.
• Revocation period: the time after signing during which you can cancel, seven days for release of age claims.

Read the whole agreement before you sign

ClauseAudit reviews severance agreements, flags broad or permanent non-disparagement clauses and missing carve-outs, and identifies other terms, such as reaffirmed non-competes, that are worth negotiating at the same time.