Weinstein scandal puts nondisclosure agreements in the spotlight
Harvey Weinstein. Bill O’Reilly. Roger Ailes. Bill Cosby. The Catholic church.
All were able to skirt years and sometimes decades of allegations of sexual harassment or assault through the use of settlements or contracts that included nondisclosure agreements: legal provisions that swear employees or alleged victims to secrecy.
Those cases — and especially the unfolding Weinstein scandal — have sparked criticism that the agreements allow powerful companies and individuals to stave off scrutiny and continue abusive practices. Now, there is a move afoot to place clear restrictions on their use.
Last week, a group of Weinstein Co. employees, in a letter published by the New Yorker last week, sought to be released from their signed nondisclosure agreements, or NDAs.
“We ask that the company let us out of our NDAs immediately — and do the same for all former Weinstein Company employees — so we may speak openly, and get to the origins of what happened here, and how,” the unnamed employees wrote.
These confidentiality agreements have become a ubiquitous legal tool for purposes both controversial and benign, such as protecting trade secrets or confidential financial information.
Nondisclosure clauses in employment contracts and severance agreements prevent employees or former employees from badmouthing their bosses. Generally, as part of a private settlement, one party agrees to drop potential or unresolved legal action in exchange for a payment — and their silence.
The latest high-profile instance of such an agreement surfaced late last week when it was reported that in January, former Fox News anchor O’Reilly paid $32 million in a confidential settlement over a threatened sexual harassment lawsuit.
Cathy Schulman, an Oscarwinning filmmaker who is president of the Women in Film advocacy group, said such deals are part of a “silencing culture” in Hollywood.
“If a person complains about their work culture, what they usually hear is: ‘It’s time to move you to another workforce. Let’s settle this out,’” Schulman said. “They are asked to make a deal with the devil. They are asked to sign and shut up. And then you plan your exit, I’ve done it myself.”
But in some cases, signing these secret agreements can benefit an individual victim, even if it allows bad behavior to continue, said Gloria Allred, the high-profile L.A. attorney whose firm has negotiated confidential settlements — and who is representing some of Weinstein’s accusers.
“If she resolves it in a way that’s positive for her and that she feels good about, then that’s what’s most important,” said Allred, who has a reputation for litigating in the press when she feels it’s in her clients’ interest. “And yes, it may mean that others may not know. But should it be mandated that no settlement should be confidential? We don’t think it’s a good idea.”
Without confidentiality agreements, many companies and high-profile individuals will choose not to settle and instead take their chances in court, which is not right for every victim, she said.
“The alternative is facing years of litigation and the risks inherent to that and the expense inherent to that,” she said. “That’s going to be hard on our clients.”
In fact, there are already limits on confidentiality agreements, though individuals who sign them may not be aware — a fact that can make NDAs more effective in practice than they might be in theory.
Wayne Outten, a New York employment lawyer and cofounder of the nonprofit Workplace Fairness, said all such agreements, whether in a severance contract or a private settlement, allow victims to report harassment, discrimination and criminal activity to authorities.
“No matter what somebody has signed, they’re free to go to the government,” Outten said. “It’s a matter of public policy.”
For instance, employees can report alleged harassment to the federal Equal Employment Opportunity Commission, crime victims can file reports with the police and corporate whistleblowers can contact the Securities and Exchange Commission.
Still, regardless of various exceptions and even in cases where an agreement might be invalidated by a court, people who sign nondisclosure agreements tend to abide by them.
Attorneys say many individuals who sign them believe an NDA applies more broadly than it truly does.
“I’ve seen plenty of confidentiality agreements that don’t mention any exceptions whatsoever, whether ones that are agreed to or that the law recognizes,” said Sherman Oaks litigator David Krause-Leemon. “I don’t know if the intent is to create a perception that there are no exceptions, but from a defense point of view you’d be better off if the plaintiff had that perception.”
That can make someone hesitant to speak even when they’re allowed to.