Non-Disparagement in a Minnesota Severance Agreement

What Rules Govern a Non-Disparagement Clause in a Minnesota Severance Agreement?

Ordinary contract law governs the clause. A severance agreement is a contract, and a non-disparagement promise in it is enforced like any other term, subject to the specific statutes covered below. Because the employer writes the agreement, it bears the risk that a court construes unclear words against it when evidence of the parties’ intent does not settle their meaning.

The Minnesota Supreme Court explained how that risk works in Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., Inc., 913 N.W.2d 687 (Minn. 2018). A court first tries to find what the parties meant, using outside evidence if there is any. “Only if a preponderance of the evidence does not prove the parties’ intent should the jury construe ambiguous terms against the drafter.” That case involved two businesses, and neither claimed the contracts were take-it-or-leave-it forms. The court also quoted an older decision that an ambiguous contract, “especially an adhesion contract, is construed against the drafter.” A severance form offered on a take-it-or-leave-it basis sits closer to that description.

The practical result is that a vague word like “negative” or “critical” can be read the employee’s way. I suggest defining the restricted statements in the agreement itself, because the definition is what a court will read first. The broader drafting sequence is in my article on drafting a Minnesota severance agreement.

When Does a Severance Non-Disparagement Clause Violate Federal Labor Law?

A clause violates federal labor law when it is broad enough to keep employees the National Labor Relations Act covers from exercising their rights under Section 7 of the Act. The rule applies to non-union workplaces too, and the National Labor Relations Board treats the offer itself as the violation. The Act’s definition of employee excludes, among others, agricultural laborers, domestic workers in a family’s home, independent contractors, supervisors, and workers of employers subject to the Railway Labor Act (29 U.S.C. § 152, para. (3)). A supervisor under para. (11) is an individual with authority to “hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees,” among other powers, when exercising it “requires the use of independent judgment.”

Section 7 gives employees the right “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection” (29 U.S.C. § 157). Section 8(a)(1) makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title” (29 U.S.C. § 158).

The Board decided McLaren Macomb on February 21, 2023. Its announcement of the ruling states: “Today’s decision, in contrast, explains that simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act” (NLRB announcement). The agreements in that case barred statements that could disparage the employer and barred disclosure of the agreement’s terms.

The rule is still applied. On April 7, 2026, in Prime Communications, LP, the Board unanimously found a violation based on severance agreements “with overly broad nondisparagement and confidentiality provisions” (NLRB weekly summary). According to the summary, “Chairman Murphy and Member Mayer noted that they apply McLaren Macomb, 372 NLRB No. 48 (2023), as extant precedent, and that they would be open to reconsideration of that precedent in a future appropriate proceeding.” Until the Board does, I suggest drafting to the current rule.

What Should the Clause Leave Out Under Minnesota Law?

A Minnesota severance non-disparagement clause should expressly preserve three kinds of speech: good-faith reports of suspected illegal conduct, disclosure of the employee’s own wages, and opposition to practices the Minnesota Human Rights Act forbids or participation in a charge or investigation under it. The clause can still reach knowingly false statements and information the law treats as confidential.

1. Reports of suspected violations. Under the Minnesota Whistleblower Act, an employer “shall not discharge, discipline, penalize, interfere with, threaten, restrain, coerce, or otherwise retaliate or discriminate against an employee regarding the employee’s compensation, terms, conditions, location, or privileges of employment” because of protected conduct (Minn. Stat. § 181.932, subd. 1). Protected conduct includes an employee who, “in good faith, reports a violation, suspected violation, or planned violation of any federal or state law or common law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official.” The act defines “penalize” as “conduct that might dissuade a reasonable employee from making or supporting a report, including post-termination conduct by an employer” (Minn. Stat. § 181.931, subd. 5). The act also protects an employee who “is requested by a public body or office to participate in an investigation, hearing, inquiry.” An employee injured by a violation may recover damages, costs, and “reasonable attorney’s fees” (Minn. Stat. § 181.935, para. (a)). My article on the Minnesota Whistleblower Act covers the protected conduct in more detail.
2. The employee’s own wages. An employer may not “require an employee to sign a waiver or other document which purports to deny an employee the right to disclose the employee’s wages” (Minn. Stat. § 181.172, para. (a)(2)). A clause that keeps the severance amount confidential should say it does not restrict the employee from discussing the employee’s own wages.
3. Human Rights Act opposition, charges, and investigations. Reprisal against a person who “opposed a practice forbidden under this chapter or has filed a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this chapter” is an unfair discriminatory practice (Minn. Stat. § 363A.15). The statute defines a reprisal to include “any form of intimidation, retaliation, or harassment.”

The same statutes protect the company’s legitimate interests. The Whistleblower Act “does not permit an employee to make statements or disclosures knowing that they are false or that they are in reckless disregard of the truth” (Minn. Stat. § 181.932, subd. 3). It does not permit disclosures that would violate law or impair the “continued protection of confidentiality of communications provided by common law” (subd. 5). The wage-disclosure law does not permit an employee, without written consent, to disclose “proprietary information, trade secret information, or information that is otherwise subject to a legal privilege or protected by law” (Minn. Stat. § 181.172, para. (b)(2)).

What Federal Carve-Outs Belong in the Clause?

Three federal rules bear on the clause: the right to file or join an Equal Employment Opportunity Commission charge, the right to talk to the Securities and Exchange Commission, and the trade secret immunity notice. I suggest an express carve-out or notice for each, because a clause without one reads as reaching conduct these rules protect.

• EEOC charges. For a release of age-discrimination claims, “No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the Commission” (29 U.S.C. § 626, subsec. (f)(4)).
• SEC communications. “No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement” (17 C.F.R. § 240.21F-17, para. (a)). The rule’s one stated exception, other than agreements about information covered by the SEC’s attorney-client provisions, does not reach an ordinary severance agreement.
• Trade secret immunity notice. The federal Defend Trade Secrets Act requires an employer to “provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information” (18 U.S.C. § 1833, subsec. (b)(3)(A)). An employer complies if it “provides a cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of law” (subsec. (b)(3)(B)). Without the notice, the employer may not recover exemplary damages or attorney fees under that Act against that employee (subsec. (b)(3)(C)). The immunity itself reaches liability “under any Federal or State trade secret law” (subsec. (b)(1)). Minnesota’s trade secret statute is the Uniform Trade Secrets Act, Minn. Stat. § 325C.01 and the sections that follow.

When the severance agreement also has confidentiality terms, I suggest putting the immunity notice in the same document, because the notice rule attaches to an agreement that governs confidential information. My article on confidentiality terms in severance agreements covers those provisions.

How Do Harassment Rules Change the Clause?

Under the federal Speak Out Act, a non-disparagement clause signed before a sexual harassment or sexual assault dispute arises cannot be enforced in court in that dispute when the conduct is alleged to have violated the law. Separately, Minnesota bars paying a sexual harassment or abuse settlement as wages or severance pay.

The Speak Out Act defines a nondisparagement clause as “a provision in a contract or agreement that requires 1 or more parties to the contract or agreement not to make a negative statement about another party that relates to the contract, agreement, claim, or case” (42 U.S.C. § 19402, para. (2)). It provides: “With respect to a sexual assault dispute or sexual harassment dispute, no nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated Federal, Tribal, or State law” (42 U.S.C. § 19403, subsec. (a)). It applies to a claim “filed under Federal, State, or Tribal law on or after December 7, 2022” (42 U.S.C. § 19404). The Act leaves room for an employer and employee “protecting trade secrets or proprietary information” (§ 19403(d)).

For a severance agreement, the result is that a court will not enforce the clause against the employee in a later harassment dispute of that kind. I suggest a carve-out for statements about conduct the employee reasonably believes was harassment, because a clause written without one promises the company protection a court will not give.

Minnesota adds a payment rule. In a sexual harassment or abuse settlement between an employer and an employee, “the financial settlement cannot be provided as wages or severance pay to the employee regardless of whether the settlement includes a nondisclosure agreement” (Minn. Stat. § 181.141). When a separation also resolves a harassment complaint, the settlement payment for that complaint should be documented and paid separately from the severance.

How Should a Mutual Clause Bind the Company?

A mutual clause binds the company to the same promise it asks of the employee, and the company can be sued for breaking it. The clause should name who speaks for the company, exclude statements the law requires, and state what the company will say in a reference.

The risk is real. As the Minnesota Supreme Court recited in Klapmeier v. Cirrus Industries, Inc., 900 N.W.2d 386 (Minn. 2017), a former chief executive and the company settled their claims in 2011 “with an agreement that included a non-disparagement clause.” He later claimed the company breached it, and in 2014 a jury awarded him $10 million. The court of appeals reversed in 2015, “holding that the evidence was insufficient to support the jury’s finding as to the amount of damages awarded.” The verdict fell on appeal for lack of damages proof, after years of litigation over the company’s own promise. For more on that exposure, see my article on employer defamation exposure.

Three drafting points follow:

1. Name the people bound. A company speaks through many people. I suggest binding named officers and directors, and agreeing to instruct them, rather than promising that no employee will ever say anything negative, because the company cannot control every coworker.
2. Carve out statements the law requires. An involuntarily terminated employee may, within 15 working days after the termination, ask in writing for the reason. “Within ten working days following receipt of such request, an employer shall inform the terminated employee in writing of the truthful reason for the termination” (Minn. Stat. § 181.933, subd. 1). That statement cannot be the basis of “any action for libel, slander, or defamation” (subd. 2). The clause should except it, along with testimony and agency responses.
3. Write the reference script. Minn. Stat. § 181.967, subd. 3, limits lawsuits over listed reference topics, starting with “(1) dates of employment,” that a private employer discloses “in response to a request for the information” (subd. 3(a)). Under clause (5), a disclosure of documented “acts of violence, theft, harassment, or illegal conduct” “must be in writing with a copy sent contemporaneously by regular mail to the employee’s last known address” (subd. 3(a)). Reasons for leaving are covered only as “written reasons for separation from employment,” disclosed in writing with the employee’s “written authorization” and a copy mailed to the employee (subd. 3(b)). For those disclosures “to a prospective employer or employment agency,” no action may be maintained “unless the employee or former employee demonstrates by clear and convincing evidence that” the information was “false and defamatory” (subd. 2). The employee must also show that the employer “knew or should have known the information was false and acted with malicious intent to injure the current or former employee.” That limit “does not apply to an action involving an alleged violation of chapter 363 or other statute” (subd. 6(b)). The Human Rights Act makes it a reprisal to “inform another employer that the individual has engaged in the activities listed in clause (1) or (2),” which include having “opposed a practice forbidden under this chapter” (Minn. Stat. § 363A.15). The statute limits defamation claims. The agreement sets the contract promise, so the agreed reference should appear in the agreement.

My article on mutual non-disparagement in settlement agreements covers the same promise outside the severance setting.

How Do the Release Rules Affect When the Clause Takes Effect?

Unless it is “given in settlement of a claim filed with the department or with another administrative agency or judicial body,” a release of Minnesota Human Rights Act claims can be rescinded for 15 calendar days after signing. A waiver of federal age-discrimination claims needs at least 21 days to consider (45 for a group program) and 7 days to revoke, unless it settles an EEOC charge or lawsuit already filed. The non-disparagement obligation and the severance payment should both wait until those periods run, because the release the company is paying for is not final before then.

The Minnesota Human Rights Act release rule applies whenever the release covers Human Rights Act claims, as a general release does. A release of past claims “may be rescinded within 15 calendar days of its execution, except that a waiver or release given in settlement of a claim filed with the department or with another administrative agency or judicial body is valid and final upon execution” (Minn. Stat. § 363A.31, subd. 2). “A waiving or releasing party shall be informed in writing of the right to rescind the waiver or release.” A release of future claims is void (subd. 1).

For a release of federal age-discrimination claims, the Older Workers Benefit Protection Act adds its own rules. The employee must have “at least 21 days within which to consider the agreement,” or 45 days for a group program, and “for a period of at least 7 days following the execution of such agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired” (29 U.S.C. § 626, subsec. (f)(1)(F), (G)). A waiver that settles an EEOC charge or a lawsuit already filed follows a different rule: the employee must have “a reasonable period of time within which to consider the settlement agreement” (subsec. (f)(2)(B)). My article on age-discrimination waiver rules lists the other required terms.

Earned wages travel on their own schedule. For a discharged employee, earned and unpaid wages “are immediately due and payable upon demand of the employee” (Minn. Stat. § 181.13, para. (a)). If they are not paid within 24 hours after the employee’s written demand, the employer is in default and owes a daily penalty under the same paragraph. For an employee who resigns, they are due by “the first regularly scheduled payday following the employee’s final day of employment,” with limited exceptions (Minn. Stat. § 181.14, subd. 1). Only the severance itself should depend on the signed agreement.

What Remedy Should the Agreement Set for a Breach?

The agreement should state the remedy, because proving money damages from a disparaging statement is difficult. A written repayment or forfeiture term gives a clearer path, but a Minnesota court will not enforce one that works as a penalty.

Klapmeier shows the damages problem: a $10 million jury verdict on a non-disparagement claim was reversed because the evidence did not support the amount. A stated sum avoids that proof problem only if it is a fair estimate. In Gorco Construction Co. v. Stein, 256 Minn. 476 (1959), the Minnesota Supreme Court held that “a provision having an impact that is punitive rather than compensatory will not be enforced.” The test is whether the amount is reasonable “in the light of the contract as a whole, the nature of the damages contemplated, and the surrounding” circumstances. Gorco involved a construction contract whose stated sum covered costs that were easy to measure, and the court treated it as a penalty.

Under Minnesota’s Uniform Public Expression Protection Act, when a breach claim rests on the employee’s “communication in a legislative, executive, judicial, administrative, or other governmental proceeding”, on a “communication on an issue under consideration or review in a legislative, executive, judicial, administrative, or other governmental proceeding”, or on speech “on a matter of public concern,” the court “shall dismiss with prejudice” a claim for which the company “fails to establish a prima facie case as to each essential element of the cause of action,” and “shall award” the employee costs and “reasonable attorney fees” related to a winning motion (Minn. Stat. § 554.08, para. (b); Minn. Stat. § 554.13, para. (a); Minn. Stat. § 554.16).

How the remedy is triggered matters as much as its size. In a severance negotiation I handled for a departing employee, the employer’s draft let the company withhold remaining payments on its own finding of a breach and take back money already paid. I redlined it so a payment could stop only after a judge found a breach and the employee had written notice, with no repayment of money already sent. An employer that starts with the court-finding version skips that round of negotiation.

I suggest tying any forfeiture to unpaid installments and to a breach a court or arbitrator finds, because that version is easier to defend and slows signing less. My article on recovering severance after a breach covers the recovery side.

What Should the Clause Itself Say?

A defensible Minnesota severance non-disparagement clause defines the restricted statements, names who is bound, sets a duration, lists the legal carve-outs, states the reference script, and sets the remedy. Each element answers a rule covered above.

1. Definition. The clause should say what counts, such as false statements of fact or statements that harm the company’s business reputation, about named subjects such as the company, its products, and its officers. It should leave room for truthful statements in the protected categories.
2. Who is bound. The employee, and for a mutual clause, named company officers and directors.
3. Duration. A fixed term is easier to justify than a permanent one. My article on a clause with no end date covers that choice.
4. Carve-outs. Good-faith reports under Minn. Stat. § 181.932; the employee’s own wages; and opposition to practices the Human Rights Act forbids. The list should also cover Human Rights Act, EEOC, National Labor Relations Board, and SEC charges and communications; truthful testimony; statements about conduct the employee reasonably believes was harassment; and Section 7 activity for employees the National Labor Relations Act covers.
5. Notices. The trade secret immunity notice or a cross-reference to the reporting-policy document, when the agreement governs trade secrets or confidential information; the written notice of the 15-day rescission right, and for a release of federal age-discrimination claims, the consideration and revocation terms.
6. Reference script and remedy. The agreed reference, and a remedy tied to unpaid installments.

I suggest leaving out a certification that the employee knows of no legal violations and has filed no complaints. In the negotiation described above, the employer’s draft included that certification, and I removed it. A required statement of that kind sits uneasily with the reporting rights in Minn. Stat. § 181.932 and gives the employee’s attorney an easy objection.

Next Steps for Your Severance Template

A Minnesota employer may keep a non-disparagement clause in its severance template, and my advice is to treat the clause as a contract term drafted around specific statutes. I suggest checking the current template against four points: an express list of carve-outs, a definition of the restricted statements, payment and effectiveness timed after the rescission and revocation periods, and a remedy a court will enforce. Each point matches a rule above, and a template missing one of them can give the employee a reason not to sign or a defense if the company sues.

If you would like me to analyze your severance template and tell you which carve-outs, notices, and timing terms it is missing, email [email protected] to start an intake and conflict check before sending the template or details about a specific separation. More on how I work with employers is on my employment law counsel page.