Six months after a layoff, a hiring manager calls your old supervisor. The call is short. Whatever gets said next can decide whether you get the new job. A non-disparagement clause in a severance agreement is supposed to stop your old employer from saying anything negative. The clause does not always work the way it sounds, and it is not the only thing standing between you and a bad reference.
What a Non-Disparagement Clause Promises You
A non-disparagement clause is a written promise. It usually sits inside a severance or settlement agreement. Neither side will say bad things about the other. On paper it sounds like a clean trade. You agree not to badmouth the company, and the company agrees not to badmouth you.
In practice the clause almost always runs one way. Most severance agreements only bind the departing employee. A corporation does not talk about former staff the way a person does, so it rarely signs anything promising silence. What protects your reputation after you leave is closer to an informal understanding among the few people who might get a reference call.
Where a Non-Disparagement Clause Usually Shows Up
A non-disparagement clause almost always rides along with a release of claims. You give up the right to sue. In return you get severance pay plus a promise that the company will stay neutral if anyone calls asking about you. Some agreements go further. They script the words a manager may say on a reference call, just job title and dates of employment, most of the time.
That scripted language is worth reading closely before you sign. A vague promise not to disparage you means far less than a line that says what HR will confirm, and nothing more.
The 2023 Ruling That Changed the Rules
For years, employers wrote these clauses about as broadly as they wanted. That changed in February 2023, when the National Labor Relations Board decided a case called McLaren Macomb. A Michigan hospital had laid off unionized workers and offered severance tied to a sweeping non-disparagement and confidentiality clause.
Regulators ruled that a clause can break federal labor law if it is broad enough to stop a worker from discussing wages or safety complaints with coworkers. That is true even for workers who are not in a union. A federal appeals court upheld that ruling in 2024.
Two things follow from this. A clause written too broadly can fall apart in court, or expose the employer who wrote it to a labor complaint. A clause that only bars false statements survives far more often than one written to silence any criticism at all, at least based on how courts have ruled so far.
What Still Isn’t Protected
None of this means the clause has no teeth. Courts still enforce a clause aimed narrowly at false or defamatory statements, one that leaves room for an employee to discuss pay or safety. What it cannot do is stop a former coworker from telling the truth about a bad experience. Nor can it stop you from filing a complaint with a government agency.
How New Jersey Law Treats a Bad Reference Even Without a Clause
Even with no clause in place, New Jersey law already limits what a former employer can safely say. Courts here recognize a qualified privilege for job references. New Jersey law generally protects an employer who shares information in good faith and believes it to be true, even from a defamation claim. That is true even when the reference is negative. That privilege disappears the moment the employer knows a statement is false, or ignores clear signs that it might be.
This is why a signed clause is not your only protection. Inventing a disciplinary write-up that never happened crosses from opinion into a false claim.
That can support a defamation case whether or not anyone signed an agreement. An attorney who regularly handles employment law litigation can help sort out which category a statement falls into. That answer often decides whether pursuing it is worth the time.
Common Non-Disparagement Clause Situations After a Layoff
This question comes up in a handful of recurring situations. One is a manager who liked you personally but has to follow a company script on reference calls. Another is a coworker who never signed anything and posts something bad online. A clause you signed does not bind a person who never agreed to it.
Stakes rise further when a defamatory reference follows a firing that was already unlawful. Judges can sometimes let a wrongful termination claim and a bad-reference problem get argued together. Rounding out the list, a new employer sometimes asks pointed questions no one at the old company is allowed to answer. That one is often the most awkward to sit through in real time.
In each case, the fix starts with rereading the language you signed. Do not assume the clause covers everything you hope it covers. Departing employees often have more tools under New Jersey employment law than they realize, once someone looks at the wording next to what happened. A short call with someone who reads these clauses for a living can settle the question fast.
What to Do If You Think a Clause Was Broken
Start by writing down what each person said, plus who heard it. Before you commit to anyone, look at an attorney’s background in employment litigation rather than picking whoever answers the phone first. Save job postings, emails, or any note that confirms a position was open to you before that call happened. A prospective employer who repeats a particular comment during a reference call gives you a real starting point. That beats a vague sense that something went wrong.
From there, a broken non-disparagement clause is a contract claim. That is separate from a defamation claim, though the two can sometimes run side by side depending on the words involved. Checking recent employment law articles and case updates can show how the McLaren Macomb ruling has played out since 2023. They can also clarify whether a clause was ever enforceable in the first place.
Questions to Ask Before You Sign
Does a non-disparagement clause protect me from a bad reference?
Partly. It can stop your old employer from bringing up bad comments on its own. It will not stop a coworker who never signed anything, and it cannot force anyone to lie under oath.
Can my employer still tell the truth about why I was fired?
In most cases, yes. Truth is a defense to a defamation claim, and a narrow non-disparagement clause will not override that. What changes is whether the company brings it up first, before anyone asks.
What happens if a non-disparagement clause is too broad to enforce?
A court or the NLRB can strike the overly broad parts and leave the rest of the agreement standing. The outcome depends on the clause’s wording and what industry the employer is in.
What Protects Your Reputation After a Dispute
A signed clause is one layer of protection. New Jersey’s qualified privilege rules, the limits the NLRB placed on broad clauses in 2023, and the plain fact that truth is a defense all work together, whether or not anyone remembers to read the fine print. Reading the wording before you sign is the first step. Reading it again later, if something about a reference feels off, is usually the step people skip.
Sources:
National Labor Relations Board. NLRB General Counsel Issues Memo with Guidance to Regions on Severance.
Rabner Baumgart Ben-Asher & Nirenberg. Employee Job References.
