Legislation has limited employers’ ability to use nondisclosure agreements in resolving sexual assault and discrimination lawsuits.
The #MeToo movement shined a light on nondisclosure agreements (NDAs)-clauses in agreements that prevent the parties (or at least one bound party) from discussing the content specified in the nondisclosure agreement.’ As the movement gained national prominence in 2017, the women sexually harassed and assaulted by film producer Harvey Weinstein, actor Bill Cosby, and USA Gymnastics team doctor Larry Nassar spoke about how NDAs had long silenced them, making them fearful of coming forward. The reporting on these accounts unearthed how powerful, repeat offenders used NDAs to shield their misconduct for decades.
Seven years later, plaintiff attorneys who represent victims of sexual harassment and discrimination face a different landscape: The federal Speak Out Act, signed into law in December 2022, renders pre-dispute non-disparagement and nondisclosure provisions unenforceable to the extent they prohibit discussion of sexual assault or sexual harassment allegations. In addition, 18 state legislatures have passed laws limiting or prohibiting the use of NDAs. These state laws vary widely, and the variations have important implications.
States have taken markedly different approaches to whether and when to permit post-dispute NDAs in settlement agreements. The silencing effects of bargained-for, post-dispute NDAs were at the center of the #MeToo discussion, but many states have been reluctant to prohibit post-dispute NDAs in their entirety, in part because of concerns about removing an important bargaining chip.
Advocates and state legislators have tried to balance how to promote victims’ ability to speak out without foreclosing their ability to negotiate resolutions of their legal claims.
Until recently, whether employers would be willing to settle claims if they could no longer “buy silence” had been an open question. However, the passage of state-level legislation provides some guidance for future reform. Lessons learned in New York, for example, strongly suggest that to meaningfully curb the use of post-dispute NDAS, the agreements must be off the table before negotiations begin. States have accomplished this with outright bans on NDAs, by making NDAs unenforceable, and by banning NDAs after the plaintiff takes action short of litigation, such as filing an administrative charge.
New York’s Limited Reforms
Months after #MeToo went viral in 2017, the New York State Legislature set forth reforms to strengthen workplace protections for victims of sexual harassment. In 2018, the legislature passed a law prohibiting nondisclosure clauses in settlement agreements and other resolutions of sexual harassment claims, unless the complainant or plaintiff states a preference for confidentiality.
New York extended its post-dispute NDA ban in 2019 to all discrimination and harassment claims, not just sexual harassment and assault claims. The 2019 law also provided protections to ensure that employees signing NDAs understand their rights: NDAs must be written in plain English and in the employee’s primary language, and NDAs that prohibit an employee from participating in an agency’s investigation or from disclosing facts necessary to receive public benefits are null and void.
The 2019 law, however, maintained the carveout for an employee’s preference for confidentiality. The availability of “confidentiality preference” has drastically limited the impact of New York’s law.” In practice, many employers are not interested in negotiating unless the client’s preference is for confidentiality. The assumption during negotiations tends to be that the plaintiff is open to negotiating confidentiality. In 2023, legislators introduced the Stop Silencing Survivors Act in response to this shortcoming, which is intended to build on New York’s existing legislation by eliminating the confidentiality preference loophole, among other things.
Ultimately, a competing bill passed instead, which left confidentiality preference agreements on the table but drastically reduced employers’ ability to punish victims who violate those agreements. The bill renders unenforceable agreements that contain clauses requiring victims to pay liquidated damages or return payment for breaching a non-disparagement or nondisclosure agreement. It remains to be seen whether employers will continue to request largely toothless confidentiality preference agreements or whether they will largely abandon them.
Lawyers representing clients in New York and other states with similar confidentiality preference carveouts (and states without any protection against NDAs) should counsel clients at the beginning of the representation about confidentiality. Prepare the client for the likelihood that an employer will send a confidentiality preference agreement or will include a confidentiality agreement in a draft settlement agreement.
Advocate for carveouts that allow clients to speak with family members and mental health providers, as long as those confidants agree to maintain confidentiality. When a client places utmost importance on their ability to speak out about the abuse, think creatively about how to achieve this goal while still obtaining monetary relief for the client. For example, you might try to negotiate for the client’s ability to speak about the facts of the incident without linking it to the specific employer, or simply be up front with the employer that the ability to speak out is a nonnegotiable term.
Washington State’s Expansive Legislation
In 2022, Washington passed the Silenced No More Act, which is the most expansive NDA-restricting law to date. It prohibits employers from requiring employees to sign nondisclosure and non-disparagement agreements regarding claims of sexual harassment, discrimination, or wage-and-hour violations, either at the outset of employment, during employment, or in the context of a settlement agreement. The law retroactively invalidates NDAS in existing employment agreements.
Although the law does not outright void confidentiality clauses in settlement agreements entered into before June 9, 2022-the effective date of the Silenced No More Act-it essentially frees victims from those clauses by making it illegal for an employer to attempt to enforce an NDA.
Washington’s Silenced No More Act also makes it illegal for employers to request an NDA in a settlement agreement and includes a private cause of action for $10,000 (or actual damages, fees, and costs) if an employer violates the law. In effect, this means an employer incurs a $10,000 penalty each time it presents an employee with a settlement agreement that includes a confidentiality provision.
The question for advocates and practitioners over time will be whether the act’s outright prohibition on NDAS discourages employers from settling claims. One hopeful development comes from the defense bar: An article printed in the Washington Defense Trial Lawyers’ Defense News states that the upshot of the Silenced No More Act is that “employers can no longer essentially ‘buy’ the silence of sexual harassment and discrimination victims” and defense attorneys should counsel their clients to “accept responsibility” because doing so is “a key to diffusing anger.”
Accepting responsibility, providing a safe work environment, setting definitive policies on conduct, and implementing mandatory training on acceptable and expected workplace conduct are all promising signs.
California’s Middle-Ground Stance
California passed the Stand Together Against Non-Disclosure (STAND) Act in 2018 and the Silenced No More Act in 2021. Together, the acts offer an effective middle ground between New York’s confidentiality preference route and Washington’s outright ban on NDAs.
The STAND Act initially applied only to sexual harassment and assault claims. The Silenced No More Act bridges the gap to include all forms of harassment and discrimination based on race, color, national origin, religion, age, sex, sexual orientation, physical or mental disability, and reprisal under the California Fair Employment and Housing Act. The act prohibits nondisclosure provisions in settlement agreements “related to a claim filed in a civil action or a complaint filed in an administrative action.” The prohibition applies to the factual information underlying the complaints, permitting parties to prevent disclosure of the settlement agreement itself or its monetary terms.
The law states that, if an employee chooses to speak about harassment, discrimination, or retaliation that they experienced, companies cannot enforce nondisclosure agreements and non-disparagement clauses.26 The employee may speak publicly about any discrimination based on race, religion, sexual orientation, gender identity, ancestry, disability, and age, if they choose. Any contract provisions that prevent or restrict an employee from sharing factual information about any type of harassment, discrimination, or retaliation are null and void.
The Silenced No More Act prohibits non-disparagement agreements that deny an employee’s right to disclose information about unlawful acts in the workplace as a condition of employment or continued employment. Non-disparagement agreements are allowed only if the agreement includes a specific carveout providing for the employee’s right to discuss workplace conduct that they have “reason to believe” is unlawful. Any agreement whose purpose or effect is to deny an employee the right to disclose information about those bad acts is unenforceable. Similar severance agreements are prohibited, too. However, the law allows broader nondisclosure provisions for settlements of negotiated claims that have been raised through an employer’s internal complaint system-but when no administrative charge or lawsuit has been filed.
The Silenced No More Act permits confidentiality in a negotiated agreement when the employee has raised their claim internally only, but not after the filing of an administrative charge. At the outset of your representation, discuss the importance the client places on being able to speak about their experience. If the client wants to speak freely about the unlawful acts they experienced, you can counsel them to file an administrative charge before you engage in discussions with the employer. That way, confidentiality will be off the table at the outset of the negotiations.
Congress and many state legislatures are contemplating introducing new legislation, or strengthening existing legislation, to regulate the use of NDAS. Advocates have called on Congress to expand the Speak Out Act to cover NDAS related to workplace discrimination and harassment broadly. Future legislation should incorporate lessons learned from reforms enacted to date to strike the right balance between ensuring victims can speak freely and allowing them sufficient leverage to settle their legal claims. Plaintiff attorneys have a role to play by sharing their experiences with legislators and other stakeholders.
