Employer Loses Appeal Ruling on 'Thief' Comments About Ex-Worker to Clients

Why It Matters

The ruling expands employer liability for off‑hand slander, making nondisparagement agreements a powerful tool for protecting former workers. It forces companies to rethink how they discuss former staff with clients, impacting risk management and HR policy.

Key Takeaways

• Ohio appeals court limits qualified privilege in client communications
• Nondisparagement clauses enforceable beyond defamation standards
• HR must train managers on post‑termination communication policies
• False employee allegations can trigger breach‑of‑contract liability
• Companies risk litigation when protecting business interests with slander

Pulse Analysis

The Ohio First Appellate District’s February decision draws a firm line between legitimate business communication and prohibited disparagement. By rejecting the qualified‑privilege defense, the court clarified that remarks about a former employee’s character—especially when unrelated to the speaker’s own services—are not protected, even if aimed at safeguarding client relationships. This interpretation expands the enforceability of nondisparagement clauses beyond traditional defamation thresholds, meaning that any statement that harms reputation can constitute a breach, regardless of whether it is proven false. For HR leaders, the ruling underscores the need to revisit settlement language and understand its practical reach.

From a risk‑management perspective, the ruling raises the stakes for companies that rely on informal gossip to ‘warn’ clients about competitors. Employers now face two parallel liabilities: a breach‑of‑contract claim under the nondisparagement agreement and a potential defamation suit if the statements are deemed malicious. The financial exposure includes not only damages but also attorney fees and reputational harm. Consequently, organizations are investing in compliance training that delineates permissible client disclosures, establishing clear escalation paths, and documenting all communications. Such proactive measures can curb inadvertent violations and preserve the integrity of client interactions.

The broader employment landscape is witnessing a surge in protective clauses that extend beyond exit‑interview confidentiality to cover any negative commentary. As more jurisdictions adopt similar interpretations, legal counsel advises drafting narrowly tailored agreements that specify the scope of permissible statements and include carve‑outs for factual, job‑related information. Meanwhile, HR professionals must balance the duty to provide accurate client references with contractual constraints, often turning to standardized reference policies. The Ohio case serves as a cautionary benchmark, signaling that future litigation will likely focus on the precise language of nondisparagement provisions and the training surrounding them.