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Authors: Abigail Blaser and Michael Kuzma

When a business’s close collaborators begin spreading negative statements about it or revealing its confidential information, raising defamation claims might not be an adequate solution. Instead, a business can mitigate these issues before they occur by entering into non-disparagement agreements with its contractors or associates. This article explores the reasons a traditional defamation claim can be less than ideal in these situations and the ways in which non-disparagement agreements can help overcome those problems.

Defamation Claims

Defamation claims include both slander (spoken defamation) and libel (written defamation). Courts have imposed a high bar to success on these claims because they stand in tension with free speech rights.[i] Further difficulties arise because of the requirements to prove falsehood, fault, and damages in a defamation claim. These elements can be fact intensive and hard to pin down. In other words, the legal issues in defamation claims are rarely clear cut and can be very costly to establish. 

Additionally, certain types of statements are not considered defamatory. For example, defamation claims do not cover statements that are true.[ii] This means that if another contractor or business makes a statement that is harmful, but not technically false, a defamation claim based on that statement will fail. Opinion statements are also not defamation.[iii] Opinion statements are those that cannot be proven either true or false. For example, “This business illegally pays employees below minimum wage” is a statement of fact that can form the basis of a defamation claim if false. However, “This business does not pay its employees well enough” is more likely to be classified as an opinion statement. A defamation claim based on that statement would probably fail, but the statement still would have the potential to harm the reputation of the business.

Finally, in many cases it is difficult to quantify the harm caused by defamation. Commonly, experts are consulted to provide insight into the value of that harm, however, the process can become expensive and still may not result in a large damages award.[iv] Further, the uncertainty might make it more difficult to reach a favorable settlement of a defamation claim, especially early in litigation when the relative strength the parties’ positions is more unclear.[v] Nominal damages are available for defamation claims, however, potential litigants should be aware that although a nominal damages award may be a moral victory, it will not compensate for either the reputational harm or the costs of a lawsuit.[vi]

Non-Disparagement Agreements

A preemptive non-disparagement agreement overcomes many of the issues with defamation claims, assuming it is well-drafted and sufficiently narrow to be enforceable. First, rather than having to prove the difficult and uncertain elements of defamation claims, a non-disparagement agreement allows a business facing defamatory, false, or otherwise harmful statements to instead bring a breach of contract claim. In that situation, the legal and factual issues are less complex, and, with a well-drafted agreement, a potential defendant might more readily settle the matter if the breach is clear or the facts are less open to debate.

Second, there is no defense of truth when a non-disparagement agreement is in place. This means that a non-disparagement agreement could cover even true or partially true statements about a business that reflect negatively on that business.[vii] In that same vein, such an agreement could also cover a wider range of “opinion” statements that are not otherwise actionable via defamation claims. Returning to the example from above, the statement “This business does not pay its employees well enough,” could be a breach of a non-disparagement agreement even though it likely could not form the basis for a defamation claim.

Next, non-disparagement agreements can be particularly useful in deterring former contractors or associates from making these sorts of statements in the first place.[viii] If the actionable statements are in writing, a former contractor is far less likely to publish them to social media. Additionally, non-disparagement agreements are often mutual. This means that this same contractor is protected from negative comments about their conduct or product. That mutuality might encourage this contractor to maintain his or her end of the deal in order the reap the promised benefits.

Finally, non-disparagement agreements can contain a liquidated damages provision, which defines the damages and eliminates guesswork in proving damages.[ix] Both the business and the individual subject to the lawsuit can know exactly what is at stake in a lawsuit, and individuals are deterred from disparaging the business.

One note of caution: although non-disparagement clauses can be very effective tools, overly broad non-disparagement clauses can be unenforceable. For example, a recent ruling by the National Labor Relations Board renders unenforceable broad non-disparagement agreements with employees and former employees from making disparaging remarks about a business.[x] It is important that any non-disparagement agreement be carefully drafted to comply with applicable state and federal laws to ensure enforceability. Experienced legal counsel can assist businesses in drafting a non-disparagement agreement that is broad enough to be effective to the particular business, while also including the limitations and carveouts necessary to be enforceable.

Conclusion

Although there is no easy way out when trying to prevent disparaging or defamatory remarks about a business or employer, having an enforceable non-disparagement agreement in place can put businesses in a better position to defend their reputation.

About the Authors

Michael Kuzma, Partner & Chair of Corporate Practice Group

Drawing upon years of investigation and antitrust experience from early in his career, Michael advises companies and organizations in the US and Japan on complex commercial real estate and corporate transactions. Follow him on LinkedIn here.

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Abigail Blaser, Associate

Abigail graduated from Notre Dame Law School in 2022 where she served as the Executive Articles Editor for the Notre Dame Journal of International and Comparative Law. Follow her on LinkedIn here.

[i] See N.Y. Times Co. v. Sullivan, 376 U.S. 254, 268-70 (1964).

[ii] T. Lenkiewicz, “Defamation: Think Before Speaking, or Filing Suit,” 69 Boston Bar Journal (2025), https://bostonbar.org/journal/defamation-think-before-speaking-or-filing-suit/.

[iii] Id.

[iv] S. Somal, “Calculation of Economic Damages in Defamation Cases,” Westlaw Today (August 19, 2024), https://today.westlaw.com/Document/Ib84b22585e4911ef9a5f906d9a270520/View/FullText.html?transitionType=Default&contextData=(sc.Default)&firstPage=true.

[v] Id.

[vi] Restatement (Second) of Torts, § 620.

[vii] A. Quinlan, “The Basics of Non-Disparagement Clauses,” McLane Middleton (March 3, 2024), https://www.mclane.com/insights/the-basics-of-non-disparagement-clauses/.

[viii] M. Matula, “Negotiating and Enforcing Anti-Disparagement Clauses: A Primer for Employers,” The National Law Review (Jan. 28, 2020), https://natlawreview.com/article/negotiating-and-enforcing-anti-disparagement-clauses-primer-employers.

[ix] Id.

[x] “Board Rules that Employers May Not Offer Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights,” National Labor Relations Board Office of Public Affairs (Feb. 21, 2023), https://www.nlrb.gov/news-outreach/news-story/board-rules-that-employers-may-not-offer-severance-agreements-requiring.