Good citizenship impels us to fittingly criticize, exhort and disparage our public institutions because this makes them better. But, if they have their way, our public universities will soon prevent us from answering our moral and civic calling to question their management and actions. Increasingly, they are erecting barriers to dissent, criticism and disparagement by imposing formal legal obligations on insiders to refrain in perpetuity from disparaging them in any way.
This suppression of voice currently comes in the form of routinely gagging terminated faculty members who, for various reasons such as lack of union support and tortuously protracted arbitration processes, have no feasible alternative but to accept their former university employer’s terms of settlement. Such settlements routinely contain broad and abusive non-disparagement clauses.
Criticism of these institutions from within is already largely viewed as intolerable and as a ground for punishment up to termination. Since academic unions have put up no defence on this front, one can fairly foresee the day that Canadian universities, much like many of their contemporary private sector employers, will foist non-disparagement commitments on their faculty members as a condition of employment from the outset. This trampling of free expression and academic freedom of faculty members is disquieting in itself but the loss of ‘iron sharpening iron’ benefits from voicing concerns that tend to improve institutional accountability and performance in the public interest is inexcusable and it ought to be sedulously resisted.
Up until now, Canadian labour arbitrators and courts have routinely enforced non-disparagement clauses, but they have not considered substantive challenges to them. Meanwhile, there are numerous credible objections to their legality and unrestricted enforceability.
On this occasion of SAFS’s thirtieth anniversary, this article examines just one of those prominent objections: the law is hostile to broad restraints against otherwise legal behaviours that parties purport to decree upon others. The law is especially antagonistic to public bodies suppressing the speech of individuals in perpetuity.
What are Non-Disparagement Clauses?
To disparage is to scorn, denigrate or criticize a person or thing. No one likes to be disparaged. It hurts the ego and can be bad for business. The idea that a someone could impede disparagement by others – and deploy the law of injunctions and compensation to enforce the prohibition – emerged a few decades ago. Customers, employees and strangers took to the internet and social media to publicly complain about their bad experiences with goods, services and workplaces.
If a targeted company (such as a car dealership) worked and settled with a complainant, it did not want the complainant to continue speaking bad about the company. Part of the settlement, in or outside of litigation, invariably included the mutual agreement that the complainant would never again say anything derogatory about that business. Occasionally the obligation is mutual. Non-disparagement clauses may be embedded in a legal agreement such as a settlement, it may be part of an employment or other contract, or it may constitute a stand-alone contract.
Disparagement is a lower standard (i.e., broader) than defamation. While defamation requires publication of something false and damaging, one may be liable on non-disparagement grounds for saying something about a former employer that is true and not damaging.
Non-disparagement clauses prohibit named individuals – in this context employees – from expressing orally or in writing anything negative in any context or form about the company in perpetuity. Even expressing true and important facts, if derogatory to the employer, will violate this restriction on speech in which case one may be sued and ordered to pay compensation to the employer as well as to cease from the disparagement.
Restrictive Covenants are Vigorously Regulated by the Judiciary
Non-disparagement, the newest form of restrictive covenant employers impose upon employees, belongs to the same family as non-competition, non-disclosure and non-solicitation. These restrictive covenants raise such serious public policy anti-competition concerns that they are illegal and void on their face. It is against public policy, and therefore void ab initio, for an employer to contractually idle former employees and keep them from choosing and pursuing their own livelihoods.
Social welfare is maximized by the free movement of labour. Competition, choice, efficiency and selection of goods and services are enhanced at the lowest prices. Can one imagine private corporate interests buying out the lifetime career and contributions of the best hockey player, classical pianist or hair stylist? Even if the employee originally agreed to not compete, that promise can be struck down by the court if the employee challenges it.
However, recognizing that the employer may be some legitimate proprietary interests to protect, on a case-by-case basis the courts will enforce individual restrictive covenants which are reasonably tailored in terms of the substantive restriction, geographical area and time. Restrictive covenants must also be clear. If they are vague and confusing, they will not be enforced.
The leading judicial decision on the issue is Shafron v. KRG Insurance Brokers (Western) Inc., from the Supreme Court of Canada in 2009. The Court found the restriction not to work within the “Metropolitan City of Vancouver” to be impossibly confusing. It is anyone’s guess whether the municipality of Richmond was intended to be in that prohibited metropolitan zone. Moreover, Canadian judges will not intervene to re-write the clause to remove the confusing bit if it could change the bargain.
Analysis
The first major obstacle for public universities in Canada will be whether they can ever justify suppressing disparagement. They are already bound by the Charter of Rights to not unreasonably hinder free expression. The momentum in Canada tends to favour expanding and protecting free speech on campus, although admittedly some of these initiatives have failed for lack of enforcement.
Criticism of government and its public bodies is political speech. This is the most valuable speech and, accordingly, it is granted the highest constitutional protection of all expression. It warrants and attracts the highest level of judicial scrutiny against public actions to limit it in any way.
Given the recency of non-disparagement clauses, the rarity of their use by public authorities, and the absence of substantive Charter challenges to them up to now, I have been unable to find any jurisprudence on whether public universities will be able to defend their use of non-disparagement covenants at all. Simply, it will be difficult for judges to silence former employees from criticizing government and its public bodies. In order for democratic governance to develop and improve, Canadians must be free to publicly criticize their government.
Narrowly tailored non-competition, non-disclosure and non-solicitation clauses are frequently entered into and are reliably, if not strictly, enforced. Non-disparagement is not yet viewed as a standard term in a settlement release. Non-competition and non-solicitation are generally time limited (to one year) while non-disclosure and non-disparagement obligations have been allowed to endure indefinitely.
Can employers justify controlling the speech of former employees, in the same way as they control their own trade secrets from public disclosure? Silencing speech (even truth) indefinitely to protect one’s reputation is a much harder sell than protecting proprietary information. The latter is inherently obtained from the employment, but facts, judgments and opinions may easily be obtained independently of employment, especially over the course of one’s lifetime. Reasonable tailoring of the suppression period might be one year or however long any employer-employee relationship, such as notice period, severance or pension top-up, continues – whichever is the shortest. That would import some rational connection between the suppression itself and the vulnerability to injury from the disparagement.
Aside from the validity of the perpetual length of the suppression, there is the lack of clarity around what is disparagement itself. One Ontario court lamented how non-disparagement clauses “may just lead to debates about whether words used were or were not disparaging.” Other similar decisions have found that simply saying that a case was settled or that one person had sued another does not amount to disparagement. These decisions indicate that, where statements are factual and do not inherently imply anything negative about a party, they do not result in the breach of a non-disparagement clause. In Ibrahim v Hilton Toronto Hotel, factually incorrect statements that an employee “lost his [human rights] case and did not receive a penny” were not disparaging.
Disparagement is a subjective determination. Liability should not be left to what the former employer considers disparaging, but what could cause an objective third-party to view that person in a materially derogative way. If the university may demand compensation (including often the full amounts paid to the former employee) for violating the restrictive covenant, the scope of what is disparaging must be mapped out in the same way as the precise territory is circumscribed for non-competition restrictions. The judgment of what is disparaging must be objective and the “materially derogative” threshold for breach should apply.
Even if disparagement is precisely defined in the restriction, another problematic aspect of scope is the modern over-reach of what expression is being restricted. Currently the scope of prohibitions on disparagement is far too wide. True statements should not be prohibited even if they are damaging. Disparaging commentary unrelated to, and not derived from, the former employment should not have to be suppressed.
Vindication of one’s legal rights should not attract disparagement liability. Under regulatory regimes, one may complain about discrimination, occupational health and safety, illegal trade, or environmental or employment practices, or file a workers’ compensation claim for injury due to the employer’s shoddy practices. One should not be barred from doing so by over-broad – abusive – non-disparagement obligations. These public regulatory regimes prohibit employees from contracting out of these protections. If one discovers, for example, that the former employer is facilitating terrorism or money-laundering, surely the non-disparagement clause would not over-ride the moral and civic duty, or the public interest, in reporting these crimes to lawful authorities. These constitute implied legal exceptions to non-disparagement clauses.
Conclusion
Public universities in Canada are increasingly imposing non-disparagement obligations via contract on faculty members. While at this point, these covenants are enacted mostly in the context of termination, there is no reason to expect they will not eventually apply to the entire working relationship.
While non-disparagement clauses have yet to be challenged and judicially analyzed in Canada, they are fraught with legal concerns. The problem discussed in this article relates to how such restrictive covenants are precarious and must be narrowly tailored to be enforceable. Current practice is not to tailor them in terms of defining the speech being suppressed and the duration of the restriction to rationally limit, connect and balance the surrender of free expressive activity with the legitimately potential risk of harm. Therefore, many contemporary broad-scope non-disparagement clauses may be unenforceable as against public policy. Whether public universities in Canada can insist on such suppression of free expression, especially if the effect is to shield public bodies from accountability and scrutiny, must soon be answered.
As evidence of the importance of this issue, in 2016 the United States Congress passed the Consumer Review Fairness Act (CRFA) which makes non-disparagement clauses illegal to ensure integrity of online reviews. California earlier this year prohibited non-disparagement provisions in employment contexts.