Non-Disparagement Clauses in Michigan: Enforceability Overview
Michigan enforces non-disparagement clauses under its contract law framework, and the state's statutory treatment of restrictive covenants is relevant context for understanding how courts approach these provisions.
Michigan's Legal Framework
Michigan's Antitrust Reform Act (MCL 445.774a), enacted in 1987, governs restrictive covenants in employment. The statute permits reasonable non-compete agreements when they protect an employer's reasonable competitive business interests. While the statute is most commonly applied to non-competes, its reasonableness principles influence courts' analysis of related restrictions.
For non-disparagement clauses specifically, Michigan courts apply standard contract principles. There is no Michigan statute that specifically prohibits or restricts these clauses in the way that California, New York, or Illinois have enacted.
What Courts Evaluate
- Voluntariness: The agreement must be entered into voluntarily. Courts scrutinize whether there was pressure, duress, or inadequate time to review.
- Consideration: Employment agreements signed at the start of employment are generally supported by the employment itself. Post-hire restrictions typically require additional consideration.
- Reasonable scope: Courts assess whether the clause is reasonably related to protecting a legitimate business interest. Restrictions that go beyond protecting reputation or goodwill face greater scrutiny.
- Clarity: Vague or ambiguous terms are construed against the drafting party (typically the employer). Clear definitions of prohibited conduct are important for enforcement.
Red Flags
- Clauses requiring you to make positive statements about the company (going beyond restricting negative ones)
- No time limit on the restriction
- Penalties that amount to forfeiture of earned compensation or benefits
- No distinction between private communications and public statements
- Restrictions on communicating with the Michigan Department of Civil Rights or federal agencies
When to Consult a Lawyer
If you are signing a severance agreement, settlement, or employment contract in Michigan with a non-disparagement clause, consider having a Michigan employment lawyer review it. Understanding the practical consequences of a breach can help you make an informed decision.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.