Employee Memo: Sign Here and Stay Quiet

In my last post, I wrote about Canva's restructuring and asked a simple question: when a company's plan fails, who owns the decisions behind it? A generous severance package handles the consequence, but it doesn't address the cause.

There's a second part to that story, and it lives in the paperwork.

Picture the day. You've just been told your job is gone. Someone from HR walks you through a packet, and somewhere in it is the part that matters most: your severance pay, your continued health coverage and maybe some extra vesting, all contingent on your signature. There's a deadline. You have a mortgage, or rent, or kids, or all three. The money is real and you need it.

So you sign. Most people do. And in many cases, you've just agreed to stay quiet about the company that let you go.

What you're usually signing

A typical severance agreement isn't a gift. It's a trade, and it usually asks for a few things in return for the money.

The first is a release of claims. You agree not to sue the company over your employment or your termination. This is the core of the deal, and it's the main thing severance is designed to buy.

The second is often a confidentiality clause. Sometimes it's narrow and covers trade secrets or the amount of the severance itself. Sometimes it's broad enough to cover almost anything about your time there.

The third is the one that gets the least attention and does the most work: a non-disparagement clause. You agree not to say anything negative about the company, its products, its leaders or its decisions. In many agreements, this runs one direction only. You can't criticize them, but nothing in the agreement stops the company or its executives from describing your departure however they like.

Why the law won't call it duress, and why that's the problem

Think about who is actually holding that pen. You've just lost your income. Your health insurance is about to end. Rent or the mortgage is due on the first, and finding a new job could take months. On paper you can refuse to sign. In real life, most people have no choice at all.

If that isn't duress, what is?

Here's the part that should bother everyone: legally, it almost never is. To void a contract for economic duress, courts generally require three things. You had no reasonable alternative, the other side made a wrongful threat, and the pressure you were under came from that wrongful act. Losing your job doesn't qualify. In most of the US, your employer was allowed to end it, and it usually wasn't required to offer severance at all. So in the eyes of the law, nobody did anything wrong to you. You were simply offered money and chose to take it.

Courts have said this plainly. A federal court in California found that economic pressure on its own, without wrongful conduct by the employer, isn't duress. Alaska's Supreme Court held that an employee's financial distress, even when made worse by being fired, wasn't enough to undo the agreement she signed.

Sit with that for a second. The pressure is real, and everyone in the room knows it's real. The law's answer is that it's too ordinary to count. The very fact that almost everyone who loses a job faces the same squeeze is the reason it doesn't matter.

That's how a person who has just lost their livelihood, reading a contract written by the other side's lawyers, on a deadline the other side set, ends up legally treated as an equal party to a voluntary deal. The agreement says you signed freely. The law agrees. Anyone who has actually been in that seat knows better.

How the silence protects the story

This is where it connects back to accountability.

When leaders frame a layoff as something that just happened, with "impacted roles" and "changing market conditions," the people best placed to tell a fuller story are the ones who were there. They saw the hiring sprees, the reorganizations, the projects that were green-lit and then abandoned. They know which decisions were made, and often by whom.

A broad non-disparagement clause, signed by hundreds or thousands of departing employees, means the company's version of events is the only one left standing. The press release gets the last word, and the people who could correct it have been paid not to.

I don't know what's in Canva's agreements, and this isn't about any one company. It's about a standard practice that quietly turns severance into something else: the price of the official story.

The fair counterpoint

Companies do have legitimate reasons for some of these terms. Trade secrets and customer data need protecting. A release of claims gives a company certainty, and that certainty is a big part of why it's willing to pay severance at all, especially when the law doesn't require it. And no company wants a former employee spreading things that aren't true.

But those needs can be met with narrow terms: confidentiality limited to genuinely confidential business information, and non-disparagement limited to false statements. Asking someone to give up truthful criticism forever is a different thing, and it's worth calling it what it is.

What a clause generally can't take away

This is general information, not legal advice, and the rules vary by state and change over time. As of this writing, a few protections are worth knowing about.

In 2023, the National Labor Relations Board ruled in a case called McLaren Macomb that offering most non-supervisory employees a severance agreement with broad confidentiality or non-disparagement terms can itself violate federal labor law. That ruling is still on the books, but it's under active challenge. The agency's top lawyer has asked the Board to overturn it, and many employment lawyers expect it will be. It also doesn't cover supervisors and managers.

Separately, an agreement generally can't stop you from filing a charge with the EEOC or reporting possible securities violations to the SEC. The SEC has brought enforcement actions against companies whose severance agreements tried to.

If you're 40 or older and the agreement asks you to give up age discrimination claims, federal law generally requires that you be advised in writing to talk to a lawyer, get at least 21 days to consider it (45 in a group layoff), and have 7 days to change your mind after signing.

Some states, including California and Washington, limit these clauses further, particularly around harassment and discrimination.

What that means for you is a question for an employment attorney, not a blog post. If you're holding one of these agreements, take every day you're given before signing, and have someone who represents you read it. Some terms are more negotiable than the packet makes them look.

If you're the founder writing one

Most founders reading this will be on the other side of the table someday. When that day comes, you get to decide what your agreement asks for.

You can keep confidentiality narrow and make non-disparagement mutual, so you're held to the same standard you're asking of someone else. You can give real time to review it and encourage people to have a lawyer look at it, even when the law doesn't require you to. You can make sure nothing in it reads like you're paying for silence about your own decisions.

The test is simple. If the decisions that led to this were sound and made in good faith, you shouldn't need to buy anyone's silence about them. And if you find yourself needing to, that tells you something about the decisions.

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