States Take Action Against Nondisclosure Agreements

Kathy Gurchiek By Kathy Gurchiek August 28, 2018
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Sixteen states have introduced legislation to limit the use of nondisclosure agreements (NDAs) in sexual misconduct cases. California legislators introduced two bills last week, and the legislation is now awaiting the signature of Gov. Jerry Brown.

The proposed laws are the latest action in the wake of the #MeToo movement prohibiting NDAs. The agreements have long been used to protect employers' sensitive business information, but now lawmakers are questioning whether it is right to use them to silence victims of sexual harassment. Some also argue that company-required NDAs enable the abuse to continue.

Movie mogul Harvey Weinstein used NDAs "to evade accountability for claims of sexual harassment and assault for at least 20 years," according to the New York Times.

SHRM Online has collected the following articles from its archives and other news outlets on NDAs in the workplace.  

States Move to Limit Workplace Confidentiality Agreements 

California lawmakers sent two bills to the governor that would limit confidentiality agreements in sexual harassment cases. One would prohibit employers from requiring nondisclosure agreements related to sexual misconduct as a condition of getting or keeping a job. The other would ban settlements in sexual harassment or discrimination cases that seek to keep the circumstances secret. It would apply to the private sector, government agencies and the legislature.

State lawmakers introduced bills in at least 16 states this year to restrict private employers' use of nondisclosure agreements in sexual harassment cases, according to the National Conference of State Legislatures.
(CBS News)  

Legislative Alert: New Jersey on Fast Track to Ban Waivers of, and NDAs Relating to, Employment Discrimination, Harassment, Retaliation Claims

New Jersey has taken the nation's first step towards enacting legislation that not only prohibits nondisclosure provisions, but also seeks to ban waivers of any discrimination, harassment or retaliation claim under New Jersey's Law Against Discrimination. 
(The National Law Review)  

A Third of Americans Leashed to Their Companies by Nondisclosure Agreements

More than one-third of the U.S. workforce is bound to their company by a nondisclosure agreement, or NDA, according to a Harvard Business Review report in February, which cited figures from a research paper published last year in the Vanderbilt Law Review. The legal contracts, which can force employees to stay silent about anything from trade secrets to corporate culture, have been steadily growing in both number and breadth as companies grow warier about competition and proprietary material. 
(Quartz)  

#MeToo Movement Sparks Bill to 'Stop Culture of Silence' in Workplaces

A bipartisan bill was introduced July 18 in Congress that would prohibit employers from requiring employees to agree to nondisclosure agreements in cases of sexual harassment in the workplace.

It also establishes a confidential tip line to report harassment to the Equal Employment Opportunity Commission; outlines workplace training requirements; and mandates that public companies disclose workplace harassment settlements, judgments, aggregate settlements and repeat settlements in filings with the U.S. Securities and Exchange Commission. Additionally, it prohibits companies from benefitting monetarily from such settlements, such as by receiving tax deductions for expenses and attorney fees in connection with harassment litigation. 
(SHRM Online)  

#MeToo Changed Our Culture. Now It's Changing Our Laws

Some states have placed limits on nondisclosure agreements. While NDAs have been a new and popular target in state legislatures this year, approaches to curbing their use have varied widely. 
(Los Angeles Times)  

When Should Employers Use Nondisclosure Agreements?

NDAs are used for a variety of reasons—including to protect employers' sensitive business information. But when should they be used, and what types of information should be protected?

News about overreaching noncompetes that prevent low-wage earners from working for competitors and NDAs that may silence victims of harassment have motivated state legislators to regulate employer use of restrictive covenants. But NDAs can still be used to safeguard sensitive information, employment law attorneys said. 
(SHRM Online)  

[SHRM members-only HR Q&A: What are the different types of sexual harassment?]  

NDAs Are Out of Control. Here's What Needs to Change

NDA contracts have grown not only in number but also in breadth. They not only appear in settlements after a victim of sexual harassment has raised her voice but also are now routinely included in standard employment contracts upon hiring. At the outset, NDAs attempt to impose several obligations upon a new employee.

NDAs also attempt to expand the definitions of secrecy to cover more information than the traditional bounds of trade secret law, in effect preventing an employee from leaving their employer and continuing to work in the same field. 
(Harvard Business Review)  

Opinion: Nondisclosure Agreements Can Enable Abusers. Should We Get Rid of NDAs for Sexual Harassment?

Confidential settlement agreements can give perpetrators even more power over their victims by silencing them. However, there are some serious concerns we need to address before writing off all NDAs about sexual harassment or assault (or other issues) as unenforceable. 
(NBC News)  

When You Can Use NDAs and Noncompetes ... and When You Can't

In this on-demand webcast, Kimberly Moore of law firm Clark Hill examines what can and can't be included in nondisclosure and noncompete agreements, how they are enforced, and alternatives to them. The 60-minute webcast is available through Oct. 18. 
(SHRM Online)

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