Is the insertion of a non-disparagement clause in an updated employee handbook legal for at will employment?

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Is the insertion of a non-disparagement clause in an updated employee handbook legal for at will employment?

I work for a small social media company which recently decided to update its

employee handbook. No problem, I’m fine with agreeing to an updated employee

handbook as regularly happens with businesses but my issue lies with a new

provision in it of a non-disparagement clause a clause agreeing to damages in

the amount of $100,000 should a written or oral disparagement ever occur of the

company or its owner in perpetuity. The way this updated employee handbook was presented to us never made mention of this fact, even in our daily afternoon

company-wide team meetings where over communication on the day’s events is

stressed. Rather, updates to the employee dress code were clearly communicated to the office in the updated employee handbook by the CEO as being part of the

Asked on August 17, 2016 under Employment Labor Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

1) You are obviously aware of the clause, so whether or not it was highlighted to you, you know of it; that means you can be held to it. And more generally, people are presumed by the law to have read, understood, and agreed to what they sign, so if you sign the handbook, in most situations, you would be held to its terms.
2) The company's motives or intentions are irrelevant--they could be sneaky and greedy, and that does not matter.
3) The law enforces, but does not like, "liquidated damages" clauses--clauses specifiying in advance what damages are; the courts often only enforce them if and to the extent they reasonably reflect the losses or costs the injured party will or did likely incur. That means that it is possible--but unfortunately, not definite--that if the clause were breached, a court would reduce the amount you'd have to pay; but since it's not definite, while a reduction in "damages" is something you'd seek if sued by the employer, it's not something to count 100% on.
As to whether to sign it, 4) the company can terminate you for not signing--so the question is, is your job worth signing something that could cause you legal trouble, if you should say something disparaging, down the road?

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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