Sexual Harassment and Non Disclosure Agreements
Navigating Non-Disclosure Agreements (NDAs) in Sexual Harassment CasesIn the world of employment contracts, Non-Disclosure Agreements (NDAs) are a common feature. Typically, these agreements are crafted to safeguard a company's confidential information or trade secrets. However, recent developments, such as the #MeToo movement, have brought NDAs into sharper focus, especially when they are used to settle sexual harassment complaints. This intersection raises unique practical and legal challenges.
Non Disclosure Provisions in Settlement AgreementsIn most legal disputes, it's customary for a settlement agreement to include a confidentiality clause preventing parties from disclosing the settlement terms. In some cases, parties may even agree to keep the entire dispute confidential.
It's the latter type of NDA that has garnered attention in sexual harassment cases. The common scenario involves a woman reporting workplace sexual harassment. The company investigates and offers her compensation to address the harassment. As part of the settlement, she agrees not to disclose the settlement amount or the underlying allegations. Why are these confidentiality agreements different and potentially problematic? The concern is that such NDAs may inadvertently silence victims, allowing patterns of unlawful behavior to persist unchecked. In cases of sexual harassment and assault, the harm can be extensive and affect multiple individuals. Some high-profile cases have shown that offenders facing accusations often have a history of allegations dating back years. If the original accusers had not signed confidentiality agreements, their stories might have come to light and led to earlier intervention. Enforcement of an NDASimilar to any contract, NDAs can be enforced through civil action in court. However, employers may be hesitant to take this route because lawsuits become a matter of public record, essentially making the information available to the world.
Instead, many opt for "self-help" enforcement mechanisms within the agreement. This could involve paying the settlement amount over time. If the plaintiff breaches the NDA by disclosing information, the company can cease payments. Additionally, these agreements might include an arbitration provision, requiring private arbitration if disputes arise. Such proceedings are not publicly recorded. Some NDAs even incorporate a "liquidated damages" clause, specifying a set amount owed to the company if the NDA is violated. When combined with an arbitration provision, this serves as a strong deterrent to disclosure. Evaluating Your Settlement AgreementThe first consideration when evaluating any settlement agreement is whether the offered amount fairly compensates you for the harm you've endured. This assessment can be challenging in harassment cases where the harm is often intangible.
You must also weigh the risks associated with full-blown litigation. Proving private behavior, such as sexual harassment, is not straightforward. There's always a chance the judge or jury may side with the defendant. When assessing the settlement amount, consider the possibility of receiving nothing after a long and painful legal process. If you conclude that the settlement amount is fair, you need to scrutinize the non-disclosure provisions. Here's what to consider:
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Recent and Potential Changes in the Law
The federal tax law of 2018 introduced a significant change: employers can no longer deduct settlement payments and legal expenses if an NDA is part of the settlement agreement.
Several states have introduced legislation seeking to bar or limit NDAs in sexual harassment settlements. Six states have already enacted such legislation, and Massachusetts is currently considering a similar law.
While these changes aim to prevent ongoing workplace sexual harassment and assault, they may inadvertently impact individual victims. For instance, companies unable to deduct settlement payments might offer lower compensation. Additionally, the absence of confidentiality in settlements could lead to more extended litigation processes.
Conversely, employers may be less insistent on NDAs if there are tax advantages for them under the new federal tax laws.
If you're contemplating settling a sexual harassment claim, consult your attorney about recent legal changes that may affect your rights concerning an NDA.
Several states have introduced legislation seeking to bar or limit NDAs in sexual harassment settlements. Six states have already enacted such legislation, and Massachusetts is currently considering a similar law.
While these changes aim to prevent ongoing workplace sexual harassment and assault, they may inadvertently impact individual victims. For instance, companies unable to deduct settlement payments might offer lower compensation. Additionally, the absence of confidentiality in settlements could lead to more extended litigation processes.
Conversely, employers may be less insistent on NDAs if there are tax advantages for them under the new federal tax laws.
If you're contemplating settling a sexual harassment claim, consult your attorney about recent legal changes that may affect your rights concerning an NDA.
Meet Our Employment Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year. She has written a book on employment law: Rules of the Road, What You Need to Know About Employment Laws in Massachusetts, and helped thousands of clients on both the employee and employer side with severance and non compete review and negotiation, wage and hour, discrimination and retaliation disputes, workplace sexual harassment situations, and advice about employment law generally.
Rebecca Rogers: Rebecca is a 2006 graduate of Boston College Law School, and has worked with slnlaw since 2013. She previously worked as an intellectual property litigation attorney for Fish & Richardson in Boston, Massachusetts, and clerked for the Massachusetts Supreme Judicial Court. Rebecca has helped clients with wage and hour disputes, employment discrimination, harassment and retaliation claims, review and negotiation of severance and non compete agreements, and advice to both employees and employers about navigating complex employment situations.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna has helped clients with review and negotiation of severance and non compete agreements, wage and hour disputes, discrimination, harassment and retaliation claims, and advice to small business owners about employment law and other business matters.
Elijah Bresley: Eli is a 2014 graduate of Seton Hall Law school, and has worked with slnlaw since 2020. He previously worked for a boutique employment law firm outside of Boston, and then for the Labor and Employment department of a large Boston firm. He also spent a year clerking for the judges of the Superior Court in Hartford, Connecticut. Eli has helped clients on the employee and employer side with all varieties of employment law issues, including employment discrimination, harassment, retaliation, and wage and hour issues, litigation in MCAD and state and federal courts, and advising employers about employment policies and practices.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped clients with wage and hour, discrimination, harassment and retaliation disputes, review and negotiation of severance agreements, and litigation in MCAD and state and federal courts on employment related issues.
How We Can Help
Our experienced legal team can guide you through the complexities of Non-Disclosure Agreements (NDAs) in sexual harassment cases, ensuring your rights are protected and that you make informed decisions regarding your settlement agreement. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
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