The non-disclosure agreement (NDA) has quickly become one of the most controversial employment practices.
Often a prerequisite to employment contracts and legal settlements, their original intent was to ensure the protection of trade secrets between two parties. Over time, their use dramatically widened. Today, one-third of the workforce is bound to an NDA.
The latest slate of criticism comes out of the #MeToo movement. Details of alleged abuse and later legal action surrounding Harvey Weinstein, Bill Cosby, and Olympic coach Larry Nassar have highlighted the role these clauses have in making aggrieved employees feel they have little recourse after raising serious wrongdoing.
According to legal experts, that’s about to change.
What began as an innocent office invite ended in an expansive and highly restrictive legal agreement.
One case in particular well illustrates the silencing power of NDAs at their peak.
In early 2015, Harvey Weinstein met Ambra Gutierrez at a Radio City Music Hall reception. After inviting her back to his Tribeca office, Guiterrez said Weinstein groped her breasts and attempted to reach his hand beneath her skirt. Ambra rebuffed his advances, and Weinstein relented.
The following day, Ambra told the New York Police Department, who asked her to help gather evidence against him via a wiretapped meeting, where Weinstein admitted to Gutierrez’ characterization of events.
In the proceeding months, Gutierrez received overwhelmingly negative press from tabloids, and stopped receiving modeling offers altogether. With few prospects, and a closed criminal case, she decided to sign what The Harvey Weinstein Company’s board later described as his “secret weapon”: an NDA.
“The moment I did it, I really felt it was wrong,” she told The New Yorker.
As records would later show, Weinstein tasked an extended network of former law enforcement officers, private investigators, and publicists to damage Gutierrez’ reputation and pressure officials to drop his criminal case. His network’s methods included the use of false identities to speak with journalists and extract information from victims, placing intimidating phone calls, and digging up and publicizing victims’ sexual history, among other tactics.
All told, Weinstein settled at least eight harassment claims in similar fashion.
The stories of Weinstein’s alleged abuse wouldn’t come out until two years later, when articles from The New York Times and The New Yorker detailed his actions—and published his recorded conversation with Gutierrez—in October 2017, the birth month of the #MeToo movement.
In the days and months following the public backlash, The Weinstein Company fired Weinstein, all original (male) board members eventually stepped down, the company faced a civil rights investigation, received lawsuits from several former business partners, declared bankruptcy, and was eventually acquired by Lantern Capital Partners for $289 million.
Neither Bob nor Harvey Weinstein received any of the sale’s proceeds, which instead went towards court costs, creditors, and alleged victims.
The future of non-disclosure agreements in sexual harassment settlements.
Public attitudes towards sexual harassment victims have changed since Gutierrez filed her complaint in 2015. The legal profession appears to be re-evaluating the use of such agreements in light of the controversy.
“I’d be surprised to find a lawyer who is confident in the enforceability of an NDA right now,” said Ron Shechtman, managing partner of law firm Pryor Cashman, to Reuters.
Due to evolving attitudes, lawyers say they’d advise high-profile execs facing harassment charges to step down—rather than fight allegations as Weinstein did. Anecdotally, a number of high-profile men appear to be taking that route. A New York Times article tracking 71 cases of misconduct by men in the public eye listed 31 who either stepped down or resigned—a number of whom have not denied details of misconduct.
In addition, now up for debate are the very “hardball” tactics Weinstein allegedly used in pursuing his victim’s silence, including the destruction of evidence and the signing of affidavits that absolve defendants. Future NDAs in sexual harassment suits might restrict protected information to only the settlement amount and names of the parties involved, according to Dabney Ware, a lawyer with the international law firm Foley & Lardner.
Still, this doesn’t spell the end of such agreements. Many argue there’s still merit to the agreement, as anonymity is preferable for many sexual harassment victims, and the funds received from settlements offer victims an opportunity to change jobs or move, if necessary.
Rather, employment lawyers expect the broader use of NDAs to continue, especially for cases where harassment claims are harder to prove and the misconduct is less “egregious” than that of Harvey Weinstein, Bill Cosby, or Olympic coach Larry Nassar. Still, we recommend HR and compliance professionals evaluate their NDAs in light of their compliance and cultural goals.
“We’re still going to have places where it seems appropriate to keep things confidential, but it’s going to be a lot more limited,” Ware said to Reuters.