The use of nondisclosure agreements, also known as NDAs, in sexual harassment cases is increasingly coming under fire. According to Reuters, some lawyers are taking the cue and recommending that people facing serious claims of misconduct simply step down rather than try to defend themselves — even through settlements tied to confidentiality. Others question whether the secret agreements would even be enforceable if they were taken to court.
Critics of NDAs argue that they allow harassers to carry on with their bad behavior without facing any real scrutiny. The settlements are often paid out by their employers with few colleagues even aware of the accusations. They can make other victims feel alone in their concerns even when a serial harasser leaves behind a string of victims.
Another view is that these agreements can serve a valuable purpose. While many victims may want to go public to prevent the harassment from affecting others, a large number of plaintiffs do not. In fact, they may want confidentiality as much as the accused does.
Also, when the confidentiality aspect of an NDA applies to all parties, it can sometimes serve to protect the victim. It can prevent the accused from mischaracterizing what happened in retaliation for the complaint. Plus, settlement amounts are likely to be higher when tied to a confidentiality clause.
Are NDAs enforceable?
In theory, violating a nondisclosure agreement subjects the violator to a breach of contract lawsuit. Depending on the details of the contract, a breach could mean returning some or all of the settlement money or even paying a penalty.
In reality, it’s not clear that NDAs in this context are enforceable at all. Several states already forbid NDAs that keep “public hazards” secret. Courts may well determine that NDAs concealing crimes such as sexual assault make poor public policy and refuse to enforce them. Plus, many harassers may be reluctant to pursue a remedy for a breach of confidentiality.
Overall, it seems likely that NDAs involving sexual harassment and misconduct will be less common and less restrictive in the future. This reflects an overall trend of reluctance to protect serial harassers and abusers, regardless of their power.
Interestingly, the latest congressional tax bill contains a provision making nondisclosure agreements less appealing in these cases. Previously, both the cost of the settlement and the legal fees involved could be deducted as a business expense. The tax bill eliminates that deduction when a confidentiality agreement related to sexual harassment is involved.
Whether you should sign an NDA in a sexual harassment settlement depends on your goals. Talk to an attorney about your concerns before signing anything.