3 Reforms for Non-Disclosure Agreements

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Sep 5, 2018

It’s a very specific legal problem faced by many corporations: How do you admit wrongdoing without hurting the company’s public image?

The solution: In exchange for compensation, have the victim sign a non-disclosure agreement and keep quiet about their experience.

But in recent months the darker side of NDAs has come into public view.

The #MeToo movement has exposed how serial sexual harassers have used non-disclosure agreements to allow them to repeatedly victimize young women without repercussion. Now, they’re apparently being used by the Trump Administration to prevent former employees from speaking openly about their experiences while working for the American people.

This may be just the tip of the iceberg. By their very nature, non-disclosure agreements are not public, so there may be even more troubling situations we’re not yet aware of.

In response to these revelations, some lawmakers have proposed curbing or even outlawing non-disclosure agreements. As an employment lawyer for many years, I am concerned that outlawing NDAs entirely may create new problems — since they can be a useful tool for some victims of harassment — but it’s clear that some reforms are necessary.

Some potential reforms

First, non-disclosure agreements should always require consent —In some circumstances, an NDA can allow victims to offer their silence in exchange for avoiding a messy trial with an uncertain outcome. For a business concerned about its public reputation, barring NDAs might lead them to instead choose to fight fire with fire and attempt to tear down the victim’s reputation instead. That can mean embarrassing personal questions in open court and vicious attacks from company lawyers.

But requiring an NDA of every employee eliminates the very idea of consent, turning what could be a valuable peace offering from a wronged worker into a tool of oppression used by the employer.

Second, non-disclosure agreements should never be allowed ahead of time — Again, victims of harassment or other workplace problems can offer to sign an NDA to help reach a compromise with their employer. But requiring them in advance takes away that option, since they would not be allowed to speak up regardless. At the same time, it forces all workers to relinquish the ability to speak freely as a condition of taking a job. If anything, this encourages bad behavior, since bad actors in the workplace can sit comfortably knowing that none of their victims will be able to speak out.

Finally, non-disclosure agreements should never be allowed in high-profile public service jobs — Non-disclosure agreements make sense for publicly traded companies that can be harmed by the actions of a rogue manager. But there is no reason why they should ever be allowed in high-profile public service jobs.

As revealed by former White House staffer Omarosa Manigault Newman, the Trump Administration has attempted to force many former staffers to sign non-disclosure agreements that would bar them from speaking negatively about the president or their experiences. This comes on the heels of similar reports that the Trump campaign forced its workers to sign similar agreements.

This is simply not appropriate. These workers served the American people on the taxpayer dime at the highest levels of government. Barring them from having a candid discussion about their experiences not only robs them of their free speech rights on some of the most important issues of the day, it also hurts them reputationally, since few people will trust the word of someone who they know — or even suspect — may be legally required to essentially mislead the public.

In this scenario, the non-disclosure agreements even hurt those who don’t have an axe to grind. Ask yourself: Knowing that he may have signed a non-disclosure agreement that bars him from criticizing the president, are you more or less likely to believe the recent book praising Trump from former White House spokesman Sean Spicer? Even if he didn’t sign one — and even if he doesn’t have anything disparaging to share — Spicer’s reputation is harmed by the mere possibility that he is being limited in what he can say.

What’s more, these non-disclosure agreements rob the American public of an honest appraisal of our own government’s workings. Already, the Trump campaign has attempted to silence Manigault Newman by using a non-disclosure agreement she signed during the election, showing all too clearly how these can be abused to limit public debate. For those who think Manigault Newman out-of-line, responses to her public disclosures are the best way to demonstrate that.

What you should do

So what do you do if you find yourself facing a non-disclosure agreement?

If you have signed an NDA, but want to speak out, here are some things to consider:

  • Did you actually sign the agreement? Is some instances, NDA are thrown in with a bunch of paperwork an employee is asked to sign. It is rare, but it does happen that an employee neglected to sign it, or the employer never actually asked for the signature. If that’s the case, there is no enforceable agreement and you are free to speak your mind.
  • Look at what the NDA actually prohibits. (Having a lawyer review it might help.) For instance, in some severance agreement NDAs, the only prohibited disclosure is about the amount of settlement, not that a settlement occurred or the circumstances leading up to it. Such agreements give the employee broad latitude to speak up. (NDAs can also be very restrictive, so you’ll want to know that before you decide to share your thoughts publicly.)
  • You can play chicken. While a big risk, you can also decide to speak out and see if your former employer will go through the time, expense and public exposure of trying to enforce the agreement. An NDA is a contract. It cannot be enforced unless someone sues. In many instances, a company will simply decide not to enforce because doing so can actually draw more attention to the situation. But keep in mind that this is a big gamble. If the company does decide to sue, you are looking at an expensive, and potentially losing, battle.

Non-disclosure agreements were created to solve a very specific legal problem. But the way they’re being used in the highest levels of American business and government show that they have now become the problem. It’s time to fix that.

This article was first published on LinkedIn.

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