Labor / Employment, On The Job

Non-Disclosure Agreements In The #MeToo Era

Should we ban the use of NDAs when sexual misconduct is involved? Let’s weigh the pros and cons.

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As an employment lawyer, I’ll tell you that settlement agreements for harassment claims containing non-disclosure provisions are the rule and not the exception. In fact, I don’t think I’ve ever seen or been involved with a settlement agreement for a sexual misconduct claim that didn’t contain non-disclosure obligations for the parties.

In this #MeToo era, there’s been a lot of debate lately about the use of non-disclosure agreements (NDAs) following the tidal wave of allegations and lawsuits regarding sexual misconduct by high-powered men in Hollywood and beyond.

A vocal group of individuals is arguing that NDAs shouldn’t be allowed at all in situations involving sexual misconduct or harassment because NDAs allow predators to cover up their actions without real consequences, ultimately allowing them to continue with the behaviors. Three states (New York, New Jersey, and California) are even considering legislation that would limit the use of NDAs in situations involving sexual misconduct.

Are these folks right? Should we ban the use of NDAs when sexual misconduct is involved? Let’s weigh the pros and cons.

Reasons to ban NDAs when sexual misconduct is involved

Proponents of banning NDAs in these circumstances argue primarily that NDAs are tools used only to silence victims and shield serial predators from civil and even criminal liability. For example, it’s alleged that Harvey Weinstein and Bill O’Reilly used NDAs for years to keep victims quiet. By using these NDAs, they are alleged to have been able to keep word from spreading about their unsavory predilections which, if word had gotten out, may have prevented further abuse.

Proponents argue that even if victims decide at some point to share their stories, the fear of violating an NDA they signed keeps them silent. The power imbalance in these situations typically favors the abuser, and so victims are many times afraid that their abusers will use their considerable resources to target them with litigation and further ruin their lives.

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Further, proponents contend that NDAs force victims to make a difficult choice after they’ve been sexually abused: either sign an NDA and receive monetary compensation to help pay for therapy and other medical treatments (and possibly relocate or find another job), or engage in what would almost certainly be protracted litigation with very uncertain results. Proponents argue that it is unfair for victims to have to make such a decision, and that abusers should not be given the power to force their victims into this Hobson’s choice.

In sum, proponents argue that if sexual abusers are not allowed to keep their actions and identities private, they will be directly discouraged from engaging in sexual misconduct. Moreover, without NDAs to keep victims quiet, organizations would work harder and take firmer steps to stop and prevent sexual misconduct within their ranks due to the damaging effects such bad publicity would have on the organization’s brand.

Reasons not to ban NDAs when sexual misconduct is involved

Those against banning NDAs counter that if alleged harassers and abusers aren’t allowed to keep the allegations confidential and prevent possible litigation, then abusers would have no incentive to settle claims early and victims would be forced to litigate. As we all know, litigation is uncertain in the best of times, and so the victim may ultimately not be able to prevail on her claims and may get nothing. Litigation is not only highly uncertain, it is also a long and arduous process which can take years to complete.

For example, in the employment context, alleged victims must first file a charge of discrimination with the Equal Employment Opportunity Commission, which investigates the claim. The EEOC’s investigation usually takes several months, and I routinely see them last for more than year. Only once the EEOC is finished investigating is the employee allowed to file a lawsuit, which usually lasts 18 months to two years from start to finish, excluding any appeals that might follow.

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Many victims may not want to be involved in such a long process. They might not want to have to relive their experience with the abuser in deposition and courtroom testimony. They may not want every detail of their life under the microscope. They may just want to settle their claims and move on with their lives. They may also want to protect their own identity and not make their allegations public.

Finally, those against banning NDAs also point out that not all purported harassers and abusers are guilty. Sometimes people contrive allegations for personal benefit or as part of a personal vendetta against another person. In those cases, it wouldn’t be fair for an innocent person to not be able to keep the allegations quiet to prevent reputational harm.

Is there a middle ground?

As a compromise, what if legislation governing NDAs required that settlement agreements in the sexual misconduct context include an option for the victim as to whether it contains a non-disclosure provision or not?

Alleged harassers would then make two different settlement offers: one for an agreement containing a non-disclosure provision (a higher offer), and another for an agreement without a non-disclosure provision (a lower offer). The harasser (or the harasser’s employer) would still have an incentive to enter into an agreement without the non-disclosure provision to resolve the claims and avoid litigation, even though the victim could go public with the allegations. Both parties would still be incentivized to settle, but the victim would get to choose whether they want to retain the ability to speak out about their experience.

I’m not sure how far any legislature will go on the issue of NDAs, but I hope that all of the above considerations are taken into account before enacting such important legislation.

evan-gibbsEvan Gibbs is an attorney at Troutman Sanders, where he primarily litigates employment cases and handles traditional labor matters. Connect with him on LinkedIn here, or e-mail him here. (The views expressed in this column are his own.)

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