Nondisparagement Clause
Published: October 24, 2026 · Last reviewed: October 24, 2026 · Est. reading time 8 minutes
What this button does
Get the right coverage answer the first time you search. Add Total CSR as a preferred source, and our expert-written coverage resources will show up higher in your search results.
In plain language: A nondisparagement clause is a promise in a contract not to say bad things about the other side. Severance deals and claim settlements often include one.
Technical definition: A nondisparagement clause is a contractual provision barring one or both parties from making derogatory statements about the other. Common in severance, settlement, and business sale contracts, it is limited by federal labor, whistleblower, and harassment laws and by state statutes.
Nondisparagement Clause at a Glance
The table below summarizes the nondisparagement clause as a contract term.
| Attribute | Detail |
|---|---|
| Also known as | Non-disparagement provision, no-criticism promise |
| Category | Contract provision |
| Lines of business | Employment practices liability, general liability, D&O |
| Industries most affected | Insurance agencies, franchising, professional services |
| Who bears the risk | The party that breaks the promise |
| Common solution | Narrow wording with legal carve-outs |
| Also interacts with | Nondisclosure terms, releases, insurer consent to settle |
Key Takeaways
- A nondisparagement clause is a contract promise not to criticize the other party.
- Agencies see these clauses in EPLI settlements, staff departures and agency sales.
- Many clients assume the clause silences every complaint, but federal and state laws carve out key exceptions.
- Account managers should flag any settlement term the insurer has not approved before the client signs.
What Is a Nondisparagement Clause in Insurance?
A nondisparagement clause is a promise not to make negative statements about another party, usually in exchange for money or a release. The spelling non-disparagement is just as common, and both versions mean the same thing. IRMI notes that these clauses often have no end date, and that a mutual version binds both sides.
Employers use them in employment contracts, separation agreements and executive separations to protect business reputation from negative public statements by former employees. Owners use them in partnership agreements, joint venture agreements, franchise agreements, vendor agreements and asset purchases. Business partnerships that dissolve often trade mutual promises as part of commercial dispute settlements and other business transactions.
Here is a worked example. A restaurant group settles a wrongful termination claim under its EPLI policy for $60,000. The former manager agrees not to criticize the company, and the company agrees its officers will not criticize her. Each side keeps its personal reputation intact, and the carrier closes the file.
How Does a Nondisparagement Clause Work?
- The dispute. An employee leaves, a claim is filed, or a business deal ends badly.
- The negotiation. Lawyers draft the settlement and add contractual provisions that define prohibited conduct, protected parties, and any temporal scope.
- The insurer review. Most liability policies require the carrier's consent before the insured agrees to settle, so the wording goes to the adjuster.
- The signature. Severance payments or settlement funds are paid once both sides sign.
- The breach. A party that later posts or publishes criticism can face a contract suit seeking monetary damages or injunctive relief.
Claim Examples Involving a Nondisparagement Clause
EPLI settlement with a mutual non-disparagement clause
A dental practice faces employment discrimination allegations from a fired hygienist. The EPLI carrier negotiates a settlement in which both sides promise not to criticize each other. Two months later, the practice manager criticizes the hygienist in a local Facebook group. The hygienist sues for breach, and the practice learns that a contract claim may fall outside its policy.
Agency producer departure with a disparagement agreement
An insurance agency gives a departing producer a severance package that includes a no-criticism promise. Within weeks, the producer emails clients claiming the agency mishandles claims. The agency sues for breach of contract and tortious interference with client relationships. A judge grants a court order stopping further emails while the case proceeds.
Disparaging statements after an insurer and insured settle
A contractor and its property carrier resolve a disputed hail claim. Both sides agree not to criticize each other publicly. Later, the contractor posts online reviews calling the carrier dishonest. The carrier's remedy is a contract claim, but the original claim payment stands.
Nondisparagement Clause vs. Nondisclosure Agreement: What Is the Difference?
A nondisparagement clause limits what a party says about the other side, while a nondisclosure agreement limits what information a party may share. Confidentiality agreements protect facts, and nondisparagement terms protect reputation.
| Comparison area | Nondisparagement Clause | Nondisclosure Agreement |
|---|---|---|
| Primary use case | Severance and settlement deals | Trade secrets, deal terms |
| Concept type | Ban on negative opinions | Ban on sharing facts |
| Typical exclusions | Truthful testimony, legal process | Information already public |
| Who is most affected by errors? | Departing employees | Employers and vendors |
| Common mistakes | No carve-out for agencies | Overly broad definitions |
What Are the Most Common Mistakes With a Nondisparagement Clause?
- Ignoring labor law protections. The NLRB's 2023 McLaren Macomb decision held that offering severance with broad non-disparagement terms can violate Section 8(a)(1) of the National Labor Relations Act for non-supervisory staff.
- Forgetting the Speak Out Act. Congress made pre-dispute nondisparagement terms unenforceable in sexual harassment and sexual assault disputes, so old onboarding language may fail.
- Skipping whistleblower provisions in employment agreements. SEC whistleblower rules, including Rule 21F-17, forbid agreements that impede reports to the SEC, which invites enforcement.
- Settling without carrier consent. An insured that signs settlement agreements without insurer approval may jeopardize coverage for the settlement.
- Assuming state law interactions are minor. California requires specific carve-out language for unlawful workplace acts, and other states have similar rules.
How to Explain a Nondisparagement Clause to a Client
Explaining a Nondisparagement Clause to a personal lines client
"Your settlement includes a promise not to criticize the other side. That means no negative social media posts about them going forward. You can still answer truthfully if a court or government agency asks you questions."
Explaining a Nondisparagement Clause to a small business owner
"When you settle a claim with a former worker, your lawyer may add a non-disparagement promise. Before you sign, send us the draft because your carrier usually has to approve settlement terms. Keep in mind that breaking the promise later is a contract issue your policy may not cover."
Explaining a Nondisparagement Clause to a CFO or risk manager
"Treat these clauses as part of your contract management and reputation management program. Federal regulations and state statutes limit what you can enforce, especially for non-supervisory staff. Narrow terms with clear carve-outs hold up better than perpetual clauses with no exceptions."
Frequently Asked Questions About a Nondisparagement Clause
Is a non-disparagement clause enforceable?
Usually, as long as the wording respects legal considerations and public policy exceptions, courts weigh contractual freedom against laws that protect employee mobility, testimony, and reports to regulators. Enforcement challenges arise when a clause is vague or blocks protected activities.
What is the difference between a non-disparagement clause and a non-defamation clause?
A non-defamation term bars only false, damaging statements, which the law already prohibits. Disparagement terms reach further and can cover true but unflattering opinions. Courts consider First Amendment concerns only when the government is involved, so private agreements are judged mostly under contract law.
Can an employer enforce a disparagement clause against a whistleblower?
No, not for reports to regulators. EEOC guidance says no agreement can stop workers from filing agency charges or joining a government investigation. Regulatory disclosures, discrimination claims, and retaliation claims stay protected regardless of the contract.
Does insurance cover a lawsuit over a non-disparagement breach?
Coverage depends on the claim. The ISO commercial general liability form CG 00 01 covers defamatory statements and product disparagement under Coverage B, but it also excludes breach of contract. A pure breach claim often has no coverage, while a related defamation count may get a defense.
How long does a non-disparagement obligation last?
Many clauses last forever unless the contract says otherwise. Courts and regulators tend to favor reasonable time limits, such as two or three years. Clear consequences for violations, like repayment of severance, also make the clause easier to enforce.
Can my insurer require a non-disparagement term to settle a claim?
Carriers do not usually demand one, but defense counsel often proposes it. A unilateral non-disparagement term binds only the claimant, so ask whether the client wants one in both directions. Every settlement term should go through the adjuster before anyone signs.
Sources and References
- International Risk Management Institute (IRMI). Nondisparagement Clause.
- National Labor Relations Board. Board Rules that Employers May Not Offer Severance Agreements Requiring Employees to Waive Labor Law Rights Broadly.
- Congress.gov. Public Law 117-224.