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States move to limit workplace confidentiality agreements

Non-disclosure agreements
How employers use nondisclosure agreements to keep sexual misconduct cases private 02:01

Confidentiality agreements have come under fire during the #MeToo movement as one way abusive men have been able to hold on to their jobs, and keep harassing more women.

State lawmakers are listening. They introduced bills in at least 16 states this year to restrict the use by private employers of nondisclosure agreements in sexual harassment cases, according to the National Conference of State Legislatures (NCSL). The provisions became law in six states: Arizona, Maryland, New York, Tennessee, Vermont and Washington.

Lawmakers in California also took action this past week, sending two bills to the governor. One, championed by actress Jane Fonda and former Fox News anchor Gretchen Carlson, 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.

Legal experts say it's not clear yet what effect such legislation will have on sexual harassment in the workplace. And some warned that the new laws could have unintended consequences.

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However, Zelda Perkins, a former assistant to Hollywood producer Harvey Weinstein, has said confidentiality agreements like the one she signed don't adequately protect victims. She left the company in 1988 after one of her colleagues told her Weinstein tried to rape her.

Former Fox News anchor Juliet Huddy, who agreed to keep the details confidential when she settled harassment claims against former host Bill O'Reilly, told NBC's Megyn Kelly last year that signing such an agreement is "not necessarily the best move." If more women knew others were being harassed, they might be better prepared to fight it, she said.

Among the new laws is one in New York, which says settlements for sexual harassment may not include a confidentiality provision unless the person who brought the complaint wants it that way. Arizona now allows victims of sexual misconduct to talk to police or testify in a criminal case even if they signed an NDA.

The NCSL said Maryland, Tennessee, Washington and Vermont now also restrict NDAs in employment contracts. Rhode Island Democratic state Rep. Teresa Tanzi sponsored a similar bill that she said was directly inspired by some of the infamous cases of harassment.

"This is how it was allowed to exist and perpetuate," she said.

The Rhode Island bill ultimately failed.

Congress also targeted confidentiality agreements in the tax bill it passed late last year. It bars people from deducting confidential settlements with sexual harassment and misconduct victims as a business expense on their federal taxes.

A new Vermont law prohibits employers from requiring workers, as a condition of employment, to sign agreements preventing them from disclosing or reporting sexual harassment. It does not outlaw voluntary NDAs in settlements.

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Among those who pushed for the Vermont law was Lisa Senecal, who said she was harassed by an executive at a technology company in Stowe, Vermont, when she was seeking a job there.

"There really isn't a more egregious form of sexual harassment than what happened with me," she said, while declining to provide details.

She struck a settlement with the company that included an NDA, and the executive left the firm. Months later, another woman told Senecal she had been harassed by the same executive under similar circumstances.

Because of the NDA, Senecal was unable to tell the woman that she had experienced almost the exact same behavior, she said.

"I think the worst is to find out there's someone else and know that you can't help that person to the degree that you'd like to be able to," she said.

The second woman sued, prompting a denial from the former executive. The company's CEO told a local newspaper he was proud of the company's track record on preventing harassment. Senecal said after hearing those comments and believing them to be untrue because of her own experience, she decided to break her silence.

In testimony in June before a federal task force studying workplace harassment, employment attorney Kathleen M. McKenna disputed the idea that NDAs are acts of secrecy that protect harassers.

She said proposals to ban them could be counterproductive. Without an NDA, for example, employers could have less incentive to settle. That could mean victims of harassment have to go through the difficulties and uncertainties of a trial or agree to a settlement with a lower dollar figure.

Orly Lobel, a law professor at the University of San Diego, said employment contracts that prevent workers in advance from speaking about illegal or troubling conditions at work are probably unenforceable already. Even so, workers often don't know that or might not be able to fight that battle, she said.

"The cost of litigation, getting an attorney to represent you -- everything is kind of stacked against an employee taking that risk," she said.

The new laws mean employees accused of misconduct are also less likely to get a promise of secrecy from their company, said Elizabeth Tippett, an associate professor at the University of Oregon School of Law. But overall, she said it's difficult to know what effect such laws will have on the workplace.

"It's a really hard question," she said. "We don't really know how it's going to change things."

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