Lessons On Non-Disparagement Clauses & How Not To Fire Employees From Former Yahoo CEO

Emotionally, getting fired is traumatic. Financially, severance pay with hindered future job prospects is almost never enough.

It doesn’t matter whether you make five dollars an hour or five hundred dollars an hour, it hurts to be fired. Especially, if you’re recently terminated Yahoo CEO Carol Bartz.

Last week, former Yahoo CEO Carol Bartz was let go by Chairman of the Board, Roy Bostock. While executive turnover during turbulent economic times is not uncommon, a CEO getting laid off via telephone is a bit more so.

Certainly, extenuating circumstances may lead a manager or board member to fire employees over the phone.

“Some CEO employment contracts have clauses requiring that a chief executive be notified immediately after the decision to terminate has been made, says Chuck Baldwin, a partner in employment law firm Ogletree, Deakins, Nash, Smoak & Stewart P.C. If a CEO is traveling when the decision is made, it may warrant a phone call, he says,” according to the WSJ Law Blog.

But, Bartz doesn’t see it that way. “These people f—ed me over,” she said in an interview to Fortune Magazine.

Bartz claims the Board of Directors blames her for the company’s slow revenue growth, but explains the directors are even more impatient after receiving criticism for rejecting a lucrative deal to sell Yahoo to Microsoft in 2007, prior to her hire.

“The board was so spooked by being cast as the worst board in the country,” Bartz said to Fortune. “Now they’re trying to show that they’re not the doofuses that they are.”

Now Bartz is the one facing flack.

Some allege she violated the non-disparagement clause of her contract for her comments to Fortune, which would leave her less ten million dollars. The word “doofus” never cost so much.

At the same time, court precedent points to a positive outcome for Bartz. In Ohio Education Assn. v. Lopez (10/19/2010), an Ohio appellate court said of the word “slimebag” and its bearing on an employee’s non-disparagement contract:

“This kind of trifling figure of speech is of so little consequence it cannot be said to be material and should be disregarded…. [T]he slang expression is such a part of modern casual speech as to be almost meaningless. OEA could not demonstrate that the message caused any damage to OEA or Reardon.”

So it seems Bartz, for the moment, can continue to make herself available for scathing interviews.

At the same time, she leaves law firms and corporations with three important management lessons:

  1. There are good and bad ways to fire employees, especially to avoid litigation;
  2. There are graceful and embarrassing ways to (be forced to) leave your employment; and
  3. Precise language for non-disparagement clauses is a necessity—the diligent drafting of which could be, quite possibly, the next up-and-coming trend for lawyers and their clients.

Remember, in the professional world, nothing good comes from bad language.



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