The weapon of choice to buy a victim’s silence?
Gagging clauses were designed to protect trade secrets, but with the Weinstein case anger is growing over their use to hush up claims of sexual harassment, bullying and other abuse
They have become the legal weapon of choice for the rich and powerful: non-disclosure agreements, used to silence the victims of sexual harassment and worse from an overbearing boss.
Gagging clauses – as they are known – were originally designed to stop employees sharing trade secrets when they moved to another company, but in recent years they have become synonymous with hushing up claims of sexual harassment, bullying and other abuse, some of it potentially criminal.
The contracts can be so binding, so all-encompassing, that victims, in return for a financial payout, are prevented from talking about allegations of conduct ranging from systematic bullying, intimidation and abuse to sexual harassment and even assault.
Many women – and men for that matter – will feel that it is easier to take the pay-off and the gagging clause that comes with it, rather than try to fight the usually wealthy and powerful boss and their legal team and risk losing everything.
Last year the use of non-disclosure agreements, or NDAS for short, was thrown into sharp focus by the exposure of Harvey Weinstein, the film producer, who was named in multiple allegations as being a serial sex abuser.
Weinstein had managed to protect his reputation for decades, often buying women’s silence in return for their signature on an NDA. His victims were said to have been put in such fear that one woman refused to talk to a counsellor about Weinstein’s attempt to rape her because she was “so afraid” of breaking the agreement. Weinstein had used lawyers on both sides of the Atlantic to keep intact a reputation, now thoroughly discredited.
When Weinstein was finally unmasked as a powerful bully and accused of being a serial sexual predator by journalists in the US, it mobilised thousands of women to speak out about similar workplace abuse under the banner of the Metoo movement.
It not only lifted the lid on the sheer scale of the harassment suffered by women, but also shed light on the extent to which NDAS were used to permit bad behaviour not only to continue but to flourish.
And the co-conspirator for all those men who managed to use NDAS as their shield? The legal system that gave gagging clauses legitimacy.
The growing controversy over the use of NDAS is understood to have prompted the Government to consider a ban on such gagging clauses for allegations of workplace sexual harassment. Under the plans, it has been reported, NDAS will be made illegal in cases where victims have brought complaints of sexual harrassment.
A Whitehall source said: “The intention is to stop NDAS being used to stop the victims of sexual harassment from going to the police, and to introduce a new onus on employers to make it absolutely explicit to their staff that these agreements cannot be used in cases where a potential crime has been committed.”
Under the new rules businesses will be expected to protect employees from groping, lewd jokes and assault. There is talk of a new national database to log complaints.
In one of the most notorious examples in the UK, young women employed as hostesses and waitresses at the all-male Presidents Club dinner were obliged to sign NDAS that were intended to prevent them from talking about groping and other harassment by paying guests.
The event at London’s Dorchester Hotel in January this year caused outrage at the highest levels.
Theresa May promised to review the use of NDAS, with her spokesman saying at the time: “The Prime Minister will look into the way these non-disclosure agreements are applied to see if changes are required.”
The Equality and Human Rights Commission, the Government’s watchdog, went further, calling for a ban on companies using NDAS to sweep sexual harassment claims under the carpet, suggesting that the deals had permitted such behaviour to “become normalised”.
Rebecca Hilsenrath, its chief executive, has said: “NDAS are rife across industries. They prevent the number of complaints bubbling up.”
Parliament’s all-party women and equalities committee began an investigation into the use of NDAS and Lucy Frazer, the justice minister, promised to curb gagging clauses that threaten to silence women who suffer potentially criminal sexual harassment. She told the committee she would “definitely” tackle lawyers who were helping employers write “unenforceable” clauses into NDAS.
She said: “It is absolutely wrong and there are measures in place and laws in place to protect people from wrongdoing. It is right that government looks at whether there are gaps that can be filled if people aren’t being protected.”
Maria Miller MP, the chair of the committee, said the Government needed to send “a really clear message to the legal profession” that it was not acceptable “to say you aren’t allowed to talk about something which is potentially a breach of the law”. An NDA is simply a legal agreement – in the form of a signed contract – between two parties, to allow trade secrets to be kept private. They are regularly used in the business world in the case of, for example, mergers and acquisitions, where one company is given sensitive financial information before it proceeds with a deal to buy another business.
But companies soon realised NDAS could be deployed in employment disputes to settle claims with departing staff rather than risk having their “dirty laundry” aired in public at a tribunal. What’s more, a pattern or culture of sexual harassment can be easily covered up by buying the silence of one complainant after another, with each alleged victim left isolated.
One employment law QC said: “It’s a standard provision. In a sense it is a gagging clause but it shouldn’t stop a company from launching its own internal investigation if there are allegations of sexual harassment.”
However, there is growing concern NDAS have been used increasingly to hush up wrongdoing; to protect a company’s reputation – or those of its executives – rather than allow a proper investigation of allegations.
“They’ve been used more lately to hide people’s dirty secrets. The consequence is the public never knows,” said Robert Ottinger, founder of the Ottinger Firm, a US employment law practice.
“We sign settlement agreements every week, and you can’t tell anyone but your spouse, your accountant and your lawyer.”
The Solicitors Regulation Authority (SRA), the legal watchdog, became so concerned over the proliferation of NDAS that it issued a warning notice in March. “We recognise that NDAS can legitimately be used to protect commercial interests and confidentiality and in some circumstances, to protect reputation,” said the SRA. It expressed its concern that some NDAS were making people “feel unable” to report concerns to among others, “law enforcement agencies”.
NDAS are legally binding, but in the wake of Metoo there has been growing disquiet that the public interest should outweigh contracts imposed upon staff who have made complaints.
The problem becomes more confusing if one employee has signed – or been forced to sign an NDA – and then another, who has no such agreement, decides to speak out about sexual harassment he or she has endured. Where does that leave the former employee who did agree to the gagging clause? They risk being sued for breach of contract even when other claims are in the public domain.
In March, an ex-assistant to Weinstein complained to a parliamentary inquiry that she was put under pressure to sign an NDA in 1998 that was “morally lacking on every level”. The gagging clause had been drawn up by a London law firm paid handsomely by Weinstein.
Zelda Perkins had been forced to stay quiet for 20 years. Ms Perkins, who had worked for Weinstein’s Miramax Films in the UK in the 1990s, told MPS “there cannot be a legal document that protects criminal behaviour”.
Ms Perkins, who claims she had been subjected to harassment by Weinstein, said she left her job after the film mogul “sexually assaulted and
‘Many feel it is easier to take the money than to fight the boss and his legal team’ ‘We have to stop NDAS being used to prevent victims from going to the police’ ‘NDAS have been used to hide dirty secrets’
attempted to rape a colleague of mine”. Weinstein has denied all allegations of “non-consensual sexual conduct”.
But the NDA was so restrictive that the alleged victim could only talk about her experience to doctors and lawyers who had themselves signed an NDA. Ms Perkins had a similarly restrictive clause. The women received £250,000 in return for them agreeing to a gagging clause for the sexual harassment, but last October – following the Metoo outcry – Ms Perkins broke the NDA to blow the whistle on the astonishing cover-up at Miramax of its founder’s behaviour. It is reckoned Weinstein has paid out millions over the years. The actress Rose Mcgowan, who had accused him of raping her in 1997, was paid $100,000 and asked to sign a non-disclosure agreement, burying the allegations. With the whistle blown on Weinstein, the Metoo movement spread to other sectors. Nine days after the first exposé on Weinstein by the
New York Times, the American actress Alyssa Milano tweeted Metoo to encourage survivors of harassment and assault to come forward and to gauge the extent of the problem. By the next day, the Metoo hashtag had been tweeted more than half a million times. On Facebook, it was posted 12 million times in 24 hours.
Thus, a movement was born.
The film world was engulfed by Metoo, with fashion, academia and Parliament soon similarly shaken. Complaints spread across the world, not limited to the US or UK. Football has also come under scrutiny with claims that young footballers were preyed upon by coaches. Two years ago, The Telegraph disclosed how a former youth footballer at Chelsea Football Club, who was sexually abused by a coach in the Seventies, had received a secret payout from the club’s current owners, but only on condition the victim, his family and lawyers were banned from talking about the abuse.
The club had wanted to protect its reputation. But following an outcry, Chelsea tore up the NDA and allowed the former footballer to go public with what had happened. Public interest over claims of abuse in football had over-ridden the gagging clause.
The sums paid out to effectively buy silence can be staggering. Bill O’reilly, the Fox News presenter and star US broadcaster, paid out nearly £10 million ($13million) in non-disclosure agreements with five women who accused him of sexual harassment and verbal abuse. The claims were settled between 2002 and 2016. “Strict confidentiality was the goal of the settlements,” reported the New York
Times. “If the women were found to breach the agreements, they would be forced to return all the money they had received, forfeit any future payments and pay Mr O’reilly’s legal fees.”
Bill Cosby, the 81-year-old comedian and actor whose reputation was so clean cut that he was nicknamed “America’s dad”, paid a female basketball player, Andrea Constand, nearly £2.6million in a confidentiality agreement signed in a 2006 settlement. Cosby had drugged and raped Ms Constand in his house. The
Cosby Show star was convicted last month of three counts of aggravated indecent assault and sentenced to three to 10 years in a state prison.
Gagging clauses have been used in Parliament, too. Since 2013, House of Commons authorities have spent £2.4million on NDAS with 53 departing members of staff to resolve employment disputes. Many of those cases involved workplace bullying.
Dame Laura Cox, in her report published last Monday into bullying and harassment in the Commons, concluded that complaints by “a cohort of individuals… cannot now be fairly investigated” in part due to victims being “inappropriately asked to sign non-disclosure agreements”.
It appeared that in the era of Metoo, gagging clauses might just go out of fashion. However, the rich and the powerful, disdainful of being held to account, will not be ready to give up such a powerful weapon in their legal armoury quite so soon.
Lawyers for Harvey Weinstein and women who have accused him of sexual misconduct are to work with insurance companies and the New York attorney general’s office to try to reach a sweeping settlement of all civil suits pending against the disgraced producer and his former film studio. Mediation sessions are scheduled for two days in early November.