State lawmakers seek to ban NDAs
Many workers have signed nondisclosure pacts only to be left with little power, legislators say
One-third of all American workers sign nondisclosure agreements, usually during the euphoria of starting their first day on the new job.
But the Connecticut legislature is trying to eliminate those agreements, saying that workers are unknowingly forced into silence without reading the fine print and later finding they have little power against well-financed employers.
The agreements are signed by low-paid workers making the minimum wage, as well as mega-stars who appear on national television.
Greenwich resident Gretchen Carlson ranks among the most prominent Americans who has signed such an agreement — and she regrets it.
A former Miss America, Carlson rose to prominence as a host on Fox News and appeared in front of millions of viewers through the years on the “Fox & Friends” morning show. After she was suddenly fired by the network, Carlson filed a lawsuit in 2016 for sexual harassment personally against Roger Ailes, a former political operative who was the most powerful player in cable news at the time. She signed nondisclosure agreements with the network and with Ailes that remain in effect today, even though Ailes died in 2017.
Carlson spoke out last week at a public hearing of the legislature’s judiciary committee, which is debating two bills on banning the agreements, known as NDAs.
“Silence in America is an epidemic,” Carlson told the committee. “One third of all Americans sign NDAs on their first day of work, with most people having no idea they’re also giving up their voice for anything that happens to them in the future. Let me be clear: We’re all in favor of NDAs at work to protect trade secrets and other
propriety information. But they’ve become so much more far reaching that it’s like you’re walking around the office with a muzzle on.”
As a high-profile controversy, Carlson’s case helped ignite the #MeToo movement, and she eventually received a settlement of $20 million that included the NDA that prevents her from speaking about the details of her case.
While Carson and some Democrats are pushing hard to eliminate the NDAs, several powerful business groups are lobbying against two bills at the state Capitol in Hartford. The groups said that the language in Senate Bill 361 and Senate Bill 4 is overly broad and could lead to wide-ranging consequences far beyond sexual harassment. The bills would essentially tip the scales too much in favor of employees and against the employers, they said.
The Connecticut Business and Industry Association successfully opposed the measure in 2022, when eliminating NDAs was removed from a larger bill.
Low-paid workers
Once her case became public, Carlson said she was contacted by “thousands of women who all shared stories of the same vicious cycle: they’d faced harassment in the workplace, had the courage to come forward, were subsequently pushed out of their jobs, and then silenced. I knew I had to do something about it.”
Nationally, Carlson spread the word in Congress, which passed measures in 2022 that Carlson described as “two of the biggest labor law changes in the last 100 years.” They are known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act” and the “Speak Out Act” regarding sexual misconduct in the workplace.
During her testimony last week, Carlson was questioned by state Rep. Matt Blumenthal, a Stamford Democrat who serves on the judiciary committee and is pushing for the legislation. Blumenthal, an attorney, noted that Carlson has far more advantages and better legal advice than the average worker.
“You are a sophisticated person,” Blumenthal told Carlson. “A lot of people in these situations are not in your situation. They may be an employee at Dunkin’ Donuts or McDonald’s or in some other situation where they don’t even know to go to a lawyer. There’s a huge amount of people who sign NDAs who don’t necessarily have the level of sophistication to know their rights or to know that it may be useful to talk to a lawyer.”
Despite receiving a large settlement, Carlson said she still has regrets.
“Had I known 7 ½ years ago, when I signed the document,” Carlson said, “that I would become one of the primary advocates of eliminating NDAs in the workplace, and that I would have actually been able to have so much success in doing so, I would have never, ever signed it because my voice is so much more important than any dollar.”
Those comments prompted an exchange with Rep. Craig Fishbein, a hard-charging attorney who serves as the committee’s ranking House Republican. He questioned why Carlson signed the document and whether she had read what she signed.
“It’s because it was considered to be the way things were done 7 ½ years ago,” Carlson responded. “It’s the way these settlements got done. … No, this had nothing to do with me not understanding.”
Fishbein countered that he has been involved in NDA settlements, adding, “When I do these cases, my client knows what they are signing.”
Carlson responded, “What you don’t know about my story is that I also had a forced arbitration clause, which is the second evil silencing mechanism in the workplace that has exploded in the last 40 years. In this year, 84 percent of all Americans will have forced arbitration clauses in their workplace handbook or contracts. In 1991, two percent of Americans had them. What that means is that I could not seek justice through my Seventh Amendment right of going to a jury.”
Business opposition
Despite the passionate pleas of Carlson and others, three of the most powerful business lobbying groups at the state Capitol are opposing the bill: the Connecticut Business and Industry Association, the Insurance Association of Connecticut and the Connecticut Hospital Association.
“The bill does not limit the prohibition to incidents of sexual harassment, but extends the prohibitions to agreements related to virtually any negative employment situation, including any situation that an employee ‘reasonably believes’ to be impermissible discrimination, harassment, retaliation, or against a ‘clear mandate of public policy,’ “said Brooke Foley, an attorney for the insurance association who also testified on behalf of the nearly 1,400member National Association of Mutual Insurance Companies.
The bill, she said, also extends the definition of the term “employee” to include prospective employees, volunteers and independent contractors.
The hospital association issued written testimony that the bills are not similar to those in New York and other states that were passed following the #MeToo movement.
“These bills do not protect employees from illegal activities by employers,” the association said. “Instead, these bills create unachievable and unwise protection for employees who disparage and defame their employer when the employer has done nothing wrong, let alone something illegal, simply because an employee holds a strong belief that an activity was illegal or against public policy. The bill does not focus on the actual conduct of the employer but on the perception of the employee, which elevates legal behavior into illegal behavior based on perception, including misperceptions.”
CBIA opposes the bills for similar reasons, saying the proposals would allow new reasons for civil lawsuits with severe financial penalties and “overly broad” definitions.
“The new causes of action are predicated on the subjective belief of the employee as to whether discrimination occurred and whether they were punished for ‘disclosure,’ which is left undefined,” said Wyatt Bosworth, associate counsel for CBIA. “This is problematic because it opens the door for disputes based on perceptions, rather than concrete evidence. In addition, both bills would prevent an employer from taking any kind of adverse action against an employee for making claims of discrimination, no matter how unfounded, outrageous, or incredible those claims are, so long as the employee subjectively believes the claims are true.”
Connecticut is trying to follow in the footsteps of New Jersey, California and Washington, which have the three toughest laws on nondisclosure agreements. If passed, the law in Connecticut would be the first in New England.
The agreements are far more widespread than many people realize, Blumenthal said.
“One third of American workers are bound by it,” Blumenthal said, “whether they know it or not.”