Every employee’s worst nightmare, getting outed on Glassdoor, could become a reality
By Michael Grothaus
You’ve left a company that you have legitimate grievances against. As thousands of others do, you go to Glassdoor to leave what you believe is a fair and accurate appraisal of your work experiences at the company. A short while later, you’re notified that your former employer has taken court action to out you, claiming your review breached the company’s severance agreements.
But this is no hypothetical nightmare; it’s what no fewer than 10 former employees of cryptocurrency exchange company Kraken are facing. As EFF (Electronic Frontier Foundation) Staff Attorney Aaron Mackey says: This litigation is designed to harass and silence current and former Kraken employees for speaking about their experiences at the company.
Glassdoor built a mud pit. It has long profited from employees who enter the pit and sling mud — anonymous negative company reviews. Meanwhile, companies reward HR staff for posting fake positive reviews. (See also: Is wrong information being given out at Glassdoor?) Now companies are conditioning severance packages on no-mud-slinging (non-disparagement) clauses. It was only a matter of time until the splatter triggered lawsuits.
What’s your take?
Once they enter the mud pit, does anyone have a right to complain about getting splattered? Do you have a right to post anonymous complaints about your experience with an employer? Does an employer have a right to stop you from talking about its reputation — in exchange for a payoff in a severance package it gives you?
Strange how so much in our employment world favors the employers. They can say disparaging things about a former employee (don’t kid yourself, they do it, I’ve heard it before, and the fear of possible litigation is no deterrent), but nail an employee if they say anything disparaging about the former employer. This “devils deal” with severance packages is another thing that favors employers. Then ad at-will employment into the mix too.
I read the EFF’s latest brief, and the original Payward complaint for breach of contract, and I think the employer probably has a very good case. Per the Payward complaint, the terminated employees signed severance agreements with broad confidentiality and non-disparagement provisions, and accepted severance payments. EFF’s claim to protected speech under the First Amendment is specious at best. The employees have no rights to assert, since they gave up most of those rights (with respect to all matters regarding their former employer) when they signed those agreements.
Most of the specifics of EFF’s Notice of Motion are irrelevant, since they appear to dance around the most important issue of guaranteed confidentiality. The employees agreed (through the severance agreements) to accept some money, walk away, and keep their mouths shut. They did the first two things, but for some reason they just didn’t have sufficient common sense to do the third.
What also defies logic is why EFF is trying to defend this kind of indefensible legal position. In these days of traceable social media activity, it’s now much easier to prove that a person breached an enforceable confidentiality or other agreement that specifically prohibits communication about a (present or former) employer. Payward’s non-disparagement terms specified, “…(including but not limited to via, sms text, chat messaging, email, voice calls, inperson conversations, written letters, social media, direct messages, posts, or online forums).” What’s unclear about that? And it summarizes with, “…you shall not harass Releasees or their agents, representatives, directors, officers, shareholders, attorneys, employees, consultants, or vendors.” Could it be that the employees just didn’t understand what the word “harass” means?
Confidentiality and non-disclosure are almost always essential parts of a severance agreement. The employer pays a premium for the security of having former employees who will not pursue legal or other adverse actions against them. If you feel that you can’t accept that money, and agree to settle ALL issues with the former employer (forever), don’t sign the paper, and don’t accept the money.
But what the Fast Company article left out was as significant as the “First Amendment” issue upon which they highlighted. Payward is a virtual cryptocurrency financial exchange. Their business depends on privacy, security, and confidentiality, perhaps more so for the particular financial market in which they operate. Unlike large (traditional) financial institutions who have been in the business and public view for a while, publishing any potentially adverse information about these kind of finance industry players could cause their business some serious damage.
If I were these employees’ former employer, I would pursue them through bankruptcy to teach them a lesson about breaching an agreement made in good faith.
@Steve: I’m guessing you’re a lawyer… but maybe not. I know many people who are just very well-versed in legal matters. Enjoyed your analysis, even if I think your suggestion to pursue them through bankruptcy is extreme. What do you make of H.R.5111 – Consumer Review Fairness Act of 2016? “Disclosure” of secrets and sensitive information is one thing. A review/critique of an employer is another. When does non-disparagement interfere with free speech? (Sorry, but this is also from EFF!)
Having said that, I agree with you when you point out that the best way to avoid being put in this position is for an employee to decline the severance deal or negotiate the terms better. When you sign, you sign, and as long as the agreement is legal, it’s enforceable. I can’t tell you how many times I’ve coached people with job offers in hand, or with severance deals in hand, to read carefully what they’re signing. When a company hands you an onerous agreement with one hand while dangling cash with the other, a person tends to focus on the cash while their other hand signs whatever is put in front of them. (We’ve all heard the canard that “they never sue anybody over that” or “it’s not even enforceable.”) It’s foolhardy but common.
Perhaps more realistic is to negotiate the agreement. This is purely anecdotal, but most attempts I’ve seen work out pretty well because these agreements tend to be boilerplate and include the kitchen sink. You can probably get the sink removed. Or you can count on the HR department being so naive (more naive than most job candidates?) that they don’t even make you sign anything if you push back gently but firmly.
Finally, it’s all about money. How much is your silence worth? If you’re gonna take the cash, expect someone to come collect whatever you promised.
I think there’s one hole in these deals that a good lawyer (for the employee) might be able to drive a truck through: Was the deal made in good faith?
Thanks again for a provocative post!
No, I am not a lawyer. However, one of my favorite TV shows used to be Paper Chase. (Really)
I have been on both sides of the table, and sometimes in the middle, and this kind of choice is very clear. After dealing with enough dirtbag employers, if I were in the employer’s position, and I attempted to do something nice for departing employees, I would take this kind of behavior personally.
After I posted my earlier response, Fast Company published a follow-up from the employer, Payward/Kraken. Kraken CEO Jesse Powell covered many of the same points I brought up. Though he had an equally clear point to make, “…we won’t tolerate double-dealing.” I do not think I can top that.
Idiots like the former employees in this story, make life difficult for the rest of us when employers they scam then try to clamp down on separation agreements or all other agreements and over-compensate for co-workers’ stupidity. Typically, they will go overboard and the rest of us suffer.
H.R. 5111 (now Public Law 114-258) is interesting and I may use it in the not too distant future. But it is not related to this case. This law only applies to (and voids) particular kinds of contracts made with consumers for purchase of goods and services, that restrict or penalizes the consumer for publishing reviews of those goods and services. However, this law specifically exempts employer-employee and independent contractor contracts.
But I do see a potential for applying this law to some virtual employment interviewing applications that force non-disclosure as a unilateral contract (but creates no employer-employee relationship). This law specifically targets contracts forced on individuals without the individuals being able to negotiate terms. Employment candidates are not considered “employees” so public reviews of that particular service would probably fall into the jurisdiction of this law.
More on this later ;)
@Steve: I agree with you about HR 5111. The example you touch on at the end of your comment is relevant here: https://www.asktheheadhunter.com/9485/wwejss-fake-recruiting-firm-credit-card-merchant-account
Please do contribute “more on this later.” I’m not an attorney, either. Paper Chase was a great movie that made me grateful for never considering law school, but a number of experiences have stimulated a fascination with the law.
Nick Corcodilos- A few years back, Armco Steel in Kansas City laid off employees in droves, and then closed their wire mill. Their Modus Operandi was this, they’d call in the employee at the end of their shift, present them with a severance package, and tell them “sign it now, it’s a one time offer, or it’s off the table”. No cool down period to look it over, nor have an attorney look it over. In 2010, I faced the same technique when my employer of 6 years tenure was purchased by a large steel mill, and they subsequently laid off the majority of their workforce, mostly older workers, many with 20-30 years tenure. I was called in at 4:00 PM and told I had until 6:00 PM to sign it, or it was off the table. I gave it a cursory look, then signed it, knowing full well that they’d strictly enforce the one year non-compete agreement. I knew I was screwed, but I was in no position to walk away from money on the table, nor could I have accrued legal fees to fight it. It also specifically stated “I would not litigate for age discrimination” (I was 52 at the time).
@Antonio: That’s pretty routine and it’s how and why people swallow those agreements. Who doesn’t want a few thousand bucks (or more)? Who’s going to have a lawyer review it in 2 hours? It’s one of the oldest business tricks in the book. Want to buy something for less from a store going out of business? Offer less than the asking price — but dangle the cash in front of their face. Most of the time they’ll go for it. There’s a lot of pressure when (a) you’re offered cash and, (b) there’s a time limit on the offer. You said elsewhere that the system favors employers. Employers created the system and have brainwashed people into thinking they have to beg.
Nick Corcodilos- while these practices are insidious, what I’ve personally seen is this. My current employer finally terminated their VP about two years ago. The guy had been there 17 years, but among his many egregious actions, he’d openly share proprietary intel with our competitor. In fact, he went to a golf tournament, removed our company golf shirt with the company logo, and wore the competitor’s golf shirt with their logo for the entire 18 holes. Where it gets really sketchy, shortly after I started with my employer 7 years ago, I was cold calling on this competitor’s good account (hey they call on my accounts all day long and try to buy the business). I had an appointment with this company’s president, and I had prepared a quote to submit. My then boss (who quit abruptly three weeks ago after 24 years) and I were discussing the action plan and the quote. The VP walked over to his desk, called our competitor’s president, and told him I was heading to their customer’s, and told him how much $ we’re involved with my quote. He did this unabashed in front of several of us. I was livid, and asked my then boss “why don’t they can this guy”? “That’s just how it is here” was his reply. Huh? Can you imagine if there was a meeting at the Pentagon of the Joint Chiefs of Staff, and afterwards, someone pulled out their cellphone in front of all the members and called Vladimir Putin to tell him all the points discussed in the meeting? But, to my point, after the terminated the VP, they evidently nullified his non-compete, because two days later, he was working for said competitor, and at a higher salary and with better perks to boot. My employer feared he’d take customers away from us. The guy actually lured one customer (his drinking buddy) away, who was a major high maintenance dud account. I’ve seen this same thing with other employers, where this fear of poaching customers is unfounded, or they poach a dud account. So what’s with these non-competes then if they’re really so ineffective?
@Antonio: NCAs are effective only when properly written and only if enforced. BTW, your story is one of those I’d label “You couldn’t make this stuff up!”
Non-competes while laying people off is hideously unethical.
@MollyG: That’s why it’s so important to have an attorney review any documents before you sign them upon departure. I wrote a whole book about it: https://www.asktheheadhunter.com/store/pc/partingcompany.htm
Nick Corcodilos- Lesson learned from 2010, as much as I needed the money and Cobra (I received 10 weeks pay and Cobra, and two weeks vacation for 6 years of service. I’ve never received severance, so I don’t know if that’s typical), I’d refuse it today, and the baloney outplacement they offered. I did in fact refuse the outplacement, and I never accepted it from any ex employer. That’s another thing about outplacement. Several older workers I know have been offered outplacement (evidently offered to avoid litigation for ageism). What they ended up with was washed out ex HR women making $ off their misery and misfortune. NONE ever found new employment through these types. A lot of worthless time wasting “job clubs” (more like Ted Talks and AA meetings), older workers being “beat up” (especially the older men), inflated and embellished resumes, out of touch “Mr Rogers speakers”, but bottom line, no results!! I’d love to see NCAs outlawed, or at the least, restricted. I believe they should be legally null and void if the employer terminated or lays off a worker. Btw, have you written any articles on outplacement services?
@Antonio: Thanks for highlighting the “outplacement trick” employers use to protect themselves from litigation. Many years ago during a massive downsizing AT&T hired me to help managers in its Career Development team (!!) find new jobs. A senior HR VP admitted to me that the reason they were paying the big 3 outplacement firms $15,000 per head for “outplacement services” was to establish a defense against employee lawsuits for wrongful termination. (These services amounted to 1,000 cubicles with phones and pcs, printed handouts and nonsense lectures about how to write a resume and “do interviews.” All that canned information was available for free at the public library.)
My advice to people who are offered outplacement is, don’t just decline it. Ask for the cash instead. “I’d like to select my own counselor and pay them myself so I can control the quality and delivery of the services.” Any amount of cash you can get in lieu of “outplacement services” is better than the services. Then spend the money as you see fit.
For more, see https://www.asktheheadhunter.com/6856/outplacement-or-door-number-2
Nick Corcodilos- kindly answer me this, why do displaced workers subject themselves to “scams” like this? Granted, some may be naive and see it as a token of a good gesture. But, as you well pointed out, it’s yet another “favor the employers best interests”.
I don’t exactly agree on the outplacement consultant issue. When that Fortune 50 company I mentioned previously did that wave of WFR, they offered a few months of Lee Hecht Harrison. No negotiations, either take it or leave it, just like the severance package.
But I found some of their core material interesting and gave me another perspective on my job search strategy, and also strongly suggested networking to get to the hiring managers (stop me if you’ve heard this one before ;). Although they weren’t perfect in all areas, I did see them take a on a serious challenge.
Our sessions included LHH clients from finance, insurance, and other industries. One gentlemen who had worked for one of the big Pharma companies since he had graduated from college about 45 years ago, had been pushed out the door in a WFR purge. He was pretty much helpless, since he had never worked for any other company, and never had a reason to be searching for a job. The consultants showed him how to re-focus his career and get the process started.
But the idea that the outplacement program really protects employers from litigation is absolute total nonsense. When there’s proof that the employer acted in bad faith, all of the outplacement consultations put together aren’t proof of anything that could derail a good lawsuit.
@Steve: Here’s what the HR exec at AT&T said to me, in so many words. “When a laid-off employee takes us to court, the judge asks, what did AT&T do to help this person find a new job? The answer is, your honor, we paid Outplacements, Inc. $15k to help the person find a job. The judge says, Outplacements, Inc., that paragon of outplacement? Case dismissed!”
I wasn’t in court ;-) but she swore that outplacement saved the company loads in litigation costs. I do agree that in a specific instance a good lawyer could go the distance in such a controversy.
@Antonio: “why do displaced workers subject themselves to “scams” like this?”
Simply because they really want to believe they can “hire” someone to get them a job. Here’s a good, if extreme, example of how perfectly smart professionals succumb:
And more about how the scam works here:
Antonio, your story explains why I think Steve above is wrong – at least morally; I cannot comment on the strictly legal side (being neither American nor a lawyer). If these agreements were fair and balanced and result of a real mutual agreement, fine. But if they really are “take it or leave it”, the employer abusing their power towards the employee to silence their opinions, not confidential information, that is a matter of freedom of speech.
Antonio well said.
You’re right. These tales are not fabrications, sadly reality in much of my day-day work life. The rub here is that one demoted manager (now a grunt who still thinks he’s a manager) is still employed, and he’s also sharing proprietary intel with the former VP (his buddy), and the competitor’s owner. Not under wraps, it’s blatantly open. They’ve drained the swamp, question is, when will they send this guy down the road? The kicker is, why do these small mom & pop places tolerate such aberrant and unethical conduct, and why are they so slow in acting on it?
Nick Corcodilos-when discussing NCAs and outplacement, and your actually having helped executive-level workers find legit jobs after being retained by AT&T years ago, what gives with this proliferation of “consultants” I both see and hear about? I don’t know if you’ve covered articles about this? Let me share a couple of stories. Back in 2008, in the throes of this last bloody recession, the company I worked for at the time (competitor of my current employer) sent myself and two other colleagues to an all day career fair at a local community college. The community college was in a high dollar white collar part of town, and we were looking for basic hourly grunts (laborers, truck drivers, mechanics, crane operators, scale clerks, etc.). Most of the attendees were older, displaced managerial types, so we were far out of our comfort zone. Those who approached our booth (and subsequently moved on) had been out of work 12-28 months typically. When asked what they’d been doing in this time, most replied “I’ve been consulting”. Hum? Soon after, my then employer hired a consultant, flew her in and put her up in a nice hotel, got her a rental car, took her out to an expensive dinner and drinks, then made us attend a two hour seminar the following day about how to generate more customers. The consultant had previously worked at a job with my then young boss. For two hours, we listened to the consultant and my boss swap war stories, self-congratulate each other for past accolades, and then they threw out one liners and tounge-and-cheek jabs. It was like a family reunion and stand up comedy show rolled together. When the two hours finally came to the end, the consultant announced it was time for her to catch her plane home. No Q&A. One of my colleagues (ironically, the worse slacker on the team) shocked all of us by asking her a question. He asked “so how then do we generate more customers”? Her reply “get a Yellow Pages, then start calling companies on the phone”. Huh?? This was 2008, not 1982. We sat there for two hours, my then employer dropped some major dime, we lost two hours that we’d never get back, and that’s all we got. Granted, I’ll submit that there are consultants like David Hunt, P.E., who post on this site, and who are obviously competent consultants, and who bring added-value to the client. But it seems to me there are a lot more shylocks and posers who hang out shingles, bill out major dime, and produce nothing, nor bring any value to the table. So my question begs, are there that many gullible or disengaged customers (like my former employer?) who retain these types, and wouldn’t a free market, and word of mouth, not eliminate these scam artists??
@Antonio: Just as there are many job seekers who really, really want to believe they can pay someone to find them a job because they don’t know how themselves, there are many inept managers who believe they can hire a consultant to do their jobs for them.
Let’s look at three kinds of consultants:
1. Real consultants, who actually work with the client to define the problem and the deliverable and then do the work necessary to get the job done.
2. Quack consultants, who get hired via some grapevine of referrals and who sucker their clients into believing “We did all we could do, you have some other problem that’s not covered by our engagement agreement, good luck.”
3. Unemployed people who are told by career coaches and resume writers to “list your job as Consultant during unemployed periods so it’ll look like you were working.”
The “free market” keeps the phonies going, because a manager can add years to their failing career by hiring consultants who can then be blamed for virtually any failure. It can take upper management a long time to figure out what’s really going on.