alt Hacker NewsThis goes to the issue of whether severance is compensation for past work or consideration for future work, which is a legal gray area.
The pro-compensation crowd assumes that because severance is taxed as compensation, that it is payment for past work, and therefore any non-disparagement clauses are illegal.
This is something I have seen just stated as if it was an iron-clad fact, rather than something that the courts don't actually uphold at present.
The pro-consideration crowd says that while severance is considered compensation after it is granted, the procedure of needing to sign a contract saying "you cannot disparage us if you want this payment" together with the fact that severance is optional and not mandated by law, means that it falls into the consideration category, and your end of the bargain is to not disparage the company if you want the severance, otherwise don't sign the contract and you wont get the severance.
That said, what is a more interesting take is whether states should make non-disparagement clauses illegal in the same way that many states have made NDA clauses illegal. That would basically force companies to not demand this in exchange for severance. This has the upside of being legally unambiguous but the downside of needing to actually fight for states to pass these laws, as opposed to just assuming that non-disparagement clauses are illegal under existing laws, which isn't an argument that will find much sympathy in the courts.
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It's not at all a legal grey area.
If it was, people fired or laid off and not offered severance would have standing to sue.
They don't.
Calling it a legal grey area is like calling vaccines a medical/scientific grey area. Or calling perpetual motion machines a physics grey area.
>The pro-compensation crowd assumes that because severance is taxed as compensation, that it is payment for past work, and therefore any non-disparagement clauses are illegal.
Here are more considerations:
- No person who did no work for the company gets to sign a "non-disparagement" clause, or get a severance.
- The severance amount is very commonly proportional to the length of service.
Insofar as the words "compensation" and work have meaning, severance is very clearly compensation for past work.
Fulfilling a non-disparagement clause is what no sane person would call work, no matter how many Orwellian mental hoops are jumped through to label it as such.
>This is something I have seen just stated as if it was an iron-clad fact, rather than something that the courts don't actually uphold at present.
Insofar as we're discussing the morality of these clauses, it's iron-clad enough.
>That said, what is a more interesting take is whether states should make non-disparagement clauses illegal in the same way that many states have made NDA clauses illegal.
The "pro-compensation" crowd argues that this indeed should happen, not that the clauses are currently universally recognized as illegal (the article we're discussing very clearly shows that it's not the case).