Employee Survival Guide® - The Long Overdue Death of Nondisclosure Agreements: Uncovering the Hidden Truth of Employment Settlements

Episode Date: February 18, 2021

In this episode of the Employee Survival Guide, Mark explores the use of nondisclosure or confidentiality provisions in settlement agreements.  In essence, employers seek to hide their bad acts behind confidentiality agreements and shield them from public disclosure.  Mark explores a new California statute being proposed that will further provide transparency to unlawful employer conduct. Finally, Mark provides a solution to creating more equality in the work place by banning nondisclosure agreements and two other initiatives he has been raising for several years.  Listen to the Employee Survival Guide podcast latest episode here  https://capclaw.com/employee-survival-guide-podcast/If you enjoyed this episode of the Employee Survival Guide please like us on Facebook, Twitter and LinkedIn.  We would really appreciate if you could leave a review of this podcast on your favorite podcast player such as Apple Podcasts.For more information, please contact Carey & Associates, P.C. at 203-255-4150, www.capclaw.com.The content of this website is provided for information purposes only and does not constitute legal advice nor create an attorney-client relationship.  Carey & Associates, P.C. makes no warranty, express or implied, regarding the accuracy of the information contained on this website or to any website to which it is linked to.If you enjoyed this episode of the Employee Survival Guide please like us on Facebook, Twitter and LinkedIn. We would really appreciate if you could leave a review of this podcast on your favorite podcast player such as Apple Podcasts. Leaving a review will inform other listeners you found the content on this podcast is important in the area of employment law in the United States. For more information, please contact our employment attorneys at Carey & Associates, P.C. at 203-255-4150, www.capclaw.com.

Welcome to another edition of the Employee Survival Guide, where you can learn everything your employer does not want you to know about and more. Now, here's attorney Mark Carey. Hey, it's Mark here, and welcome to another edition of the Employee Survival Guide. This week, we're going to talk about long overdue death of nondisclosure agreements and uncovering the hidden truth of employment settlements. In an often quoted line from the hit TV series Dexter, actor Michael C. Hall, who plays the title character, said, There are no secrets in life, just hidden truths that lie beneath the surface. For those of us involved in the resolution of employment claims on behalf of employees, this quote has special meaning. employment claims on behalf of employees, this quote has special meaning. Beneath the surface of most employment settlement agreements lie the undisclosed facts that led to the conflict,

which often result in the messy end of an employment relationship. Recently proposed legislation in California seeks to ensure that those hidden truths do not remain hidden forever. A new law proposed in California this week, called the Silence No More Act, or S-N-M Act, is intended to prevent the enforcement of nondisclosure provisions in a wide variety of employment settlement agreements. The legislation proposed by the California State Senator Connie Levia will expand upon the 2018 STAND Act, which stands for the Stand Together Against Nondisclosure, and will protect plaintiffs in cases of employment discrimination and harassment of all kinds who choose to speak out publicly about their experiences. Under the current provisions of the STAND Act,

only plaintiffs in cases of gender discrimination or sexual harassment may avoid nondisclosure provisions. The new law will expand the STAND Act to prevent the use of nondisclosure provisions in employee severance agreements. Under the S&M Act, targets of discrimination based on race, national origin, religion, gender, etc. will also be free to ignore the contractual gag orders companies negotiate into their settlement agreements. This legislation has been supported by employee rights groups in California, including the California Employment Lawyers Association and the Equal Rights Advocates. The new laws are seen as an end to the days when employer misconduct can be hidden from public view. Workers who have been targeted with harassment

and discrimination will be free to speak their truth publicly. The perpetrators of this type of misconduct can no longer hide behind the veil of secrecy provided by their company. Non-disclosure and non-disparagement agreements will no longer be used to silence employees. The hope is that the public disclosure of the details of these abusive work environments will prevent perpetrators from targeting other workers in the future. Although the stand and SNM, if enacted, are or would be exclusively California laws. These statutes could ultimately have a broad national impact. Other states often follow California's lead in employment matters.

Further, the fact that so many large technology companies are headquartered in California gives these laws an outsized influence on the national conversation about nondisclosure agreements. In the wake of the STAND Act, a number of states have enacted some limitations on nondisclosure enforcement, including Washington, New York, New Jersey, Vermont, and Tennessee. Many more states are likely to see some version of this legislation in the future. As an employment attorney, I was very curious about how this new legislation might impact the ability of plaintiff lawyers to negotiate settlements for clients in employment discrimination cases. Often, the best leverage plaintiffs have in the early stages of an employment case is a prospect of public disclosure of the misconduct on the part of the company employee or manager. The reason many companies offer settlement agreements to claimants

is to avoid embarrassing public disclosures of uncomfortable truths about their corporate culture or work environments. Companies also have an interest in keeping settlements secret to avoid what they see as quote-unquote encouraging other claimants to looking to cash in on potential claims. In other words, the concern is that the nondisclosure and nondisparagement provisions outlawed by the STAND Act and the S&M Act are the best tools to obtain fair settlements for employees who have been targeted with harassment or discrimination. Further examination of the proposed statute reveals that its scope is more limited than I had anticipated. These statutes are actually structured to encourage and not discourage early settlement of discrimination

cases. The STAND Act allows for use and enforcement of non-disclosure agreements, so-called NDAs, in cases where there has yet to have been any court or agency filings. So, during the initial stage of the claim, when a demand letter has been sent to the employer, but where the claims have not been filed with the state or federal human rights agencies, such as the Equal Employment Opportunity Commission, and no lawsuit has been filed, the companies may include NDAs in settlement agreements and they are enforceable. This exception to the ban of NDAs is highly significant. Far from discouraging early settlements of discrimination claims, this feature of the proposed law offers employers a powerful incentive to settle employment

discrimination and harassment claims early. If an early settlement is not reached, then the agency filings will occur and the employer will lose the right to demand an NDA as part of the settlement agreement afterwards. In order to keep employee misconduct secret, employers will have to settle implement discrimination cases early and often. While some cases can be kept secret by early settlement negotiations, targets of discrimination who want to shed light on their experience can ensure their ability to speak out by filing their claims with state and federal agencies. Opponents of anti-NDA legislation contend that restricting NDAs takes away a survivor's choice to keep their cases private and provides a strong incentive for employers

to refuse settlement options and to defend themselves against publicly disclosed allegations. According to attorney Jill Bassinger, an entertainment litigation attorney in California, she says this harms survivors of sexual harassment and assault by removing their choice and forcing them to endure the hardship and uncertainty of a public trial as the only means of vindicating their claims, end quote. Once an agency filing occurs or a lawsuit is commenced, the NDAs become unenforceable. It seems as if these laws would remove a strong incentive for defendant employers to settle claims. It appears, however, as if the STAND Act has resulted in an increase in pre-filing mediations in employment cases in California. According to Mariko Yoshihara, the Legislative Counsel and

Policy Director of the California Employment Lawyers Association, the predictions and fears over the STAND Act impairing the ability to settle have not been borne out. According to Attorney Yoshihara, attorneys involved in this type of litigation have informally reported that the legislation has not lowered settlement amounts or impaired the settlement process. Additionally, according to Yoshihara, it has made it easier to advocate for employee rights from a public policy perspective because these targets of harassment and discrimination can make their stories public. While dispositive data on this point is not yet available, it seems as if the legislation is working in California. Further, fears surrounding the forced public disclosure of the identity of the claimant are unfounded. Under the STAND Act, there are specific provisions which protect the identity of the complaining employee

in the context of a lawsuit. The STAND Act includes a specific provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, including documents and pleadings filed in court at the request of the claimant. Thus, the anti-NDA legislation does not force the disclosure of a claimant's identity. While many employer advocacy groups, including various chambers of commerce and industry and trade associations, have opposed legislation such as the STAND and S&M, similar legislation should be considered by all state legislatures that have not already enacted similar laws. When it comes to use of NDAs in employment

discrimination and sexual harassment cases, there is an unfair imbalance of power between the bargaining parties. The employers who are often defending the harasser or denying that the harassment occurred have an overwhelming advantage over the complaining employee in terms of investigative, legal, personal, and financial resources. Employers are frequently holding all the cards in settlement negotiations. Legislations such as STAN and S&M will help to level the playing field, at least with respect to the NDAs. Place in the power over which aspects of the case can or will least with respect to the NDAs. Placing the power over which aspects

of the case can or will be made public in the hands of employees who experience harassment and discrimination will help balance the power in the arena of employment settlement agreements. As evidenced by the initial success of the STAND Act, these laws can be important tools in ending the culture of silence that has permitted harassing and discriminatory conduct behavior to continue in the workplace for so long. In a recent opinion piece, the feminist writer and critique Marcy Bianco said, If the societal change necessary for dignity and justice is to occur, we must move from awareness to accountability. This legislation should help bridge the gap between awareness and accountability. We need to see a whole lot more of those hidden truths lying beneath the surface

of the American workplace. Hey, I'm always interested in finding out what our listeners are going through at work. So if you have a question regarding your work, please send it to us at info.capclaw.com. And I will answer the question on our next podcast and I will keep your name out of it, of course, but please send your questions. Thanks. Hey, it's Mark here. And if you're in need of an employment attorney and regarding your situation at work, please give us a call at Carat Associates PC at 203-255-4150 or on the web at capclaw.com. In my experience as an employment attorney litigating for the last 25 years, I will tell you that the ability of individual employees to seek equality in the workplace, especially during these changing times that we purportedly are seeing after the summer of 2020, I'm going to just lay it out there that we are far away from achieving that.

And why? Well, two important or three important issues confront this issue, and there won't be equality unless this happens. First, NDAs, what the confidentiality and settlement agreements seeks to basically shield from the public's view and avoid essentially what I call public shaming. So all the states should pass laws to ban confidentiality of settlement agreements of any kind, of any type of discrimination or harassment, period, end of story. And I'd like to hear what employers have to say about that because, well, they're not going to achieve equality in their workplace unless they do that. The second thing is forced arbitration. Very similar. It takes from the public view the ability of employees to bring their cases to court, to bring to the attention of the public the corporate wrongdoing, and to secretize it. That's what forced arbitration means. So if you have an

arbitration agreement, and 50% of employees do because they're so rampant, and they're egregiously enforced by courts all the time, which is hugely unfortunate, and they basically conceal bad actors behind the veil of a purported arbitration provision that says, this is the way we need to do it. It's cheaper, et cetera. That's a bunch of nonsense, or I call it's bullshite in Irish terms. And the third aspect is the at-will implement rule. Now, you've heard me talk about it in past articles and podcast posts. The at-will rule, which is an arcane rule developed by some lawyer in upstate New York years and years ago. And what it essentially does is it allows any employee to be fired for no reason whatsoever and shields the ability of the employer to give a reason why they fired for somebody.

We have been propounding the issue of banning the Atwill employment and for the following reason. of banning the at-will employment and for the following reason. If you ban the at-will and you force an employer to demonstrate a reason for termination for cause, aka the for-cause termination instead of at-will rule, then you have an employer who's got to reconcile the performance with real facts, not some you raised dry brow or you dressed inappropriately one day or whatever they come up with because I've seen it all. But when you make employers obtain facts that are supportive of bad performance, that is the only grounds to terminate somebody. And those three principles, the banning of the nondisclosure or confidentiality in settlement agreements, the banning of forced arbitration, and the banning of that will rule, the three of them together, okay, the three of them together will only result in equality in the workplace,

period. So you can cry all you want about BLM and any other racial aspect to Asian rights, etc. It's not going to happen in this state of this country, period, no matter what party is in control. That's my opinion, but that's after looking at this for a very long time. I'm going to tell you, management's got a hook on this thing until employees start to wake up and people start to motivate. Things will remain the same going forward for the next four years, period. So my little editorial at the end of this podcast, but that's how I really feel, and that's what I'm really seeing. If you'd like to have more information about this podcast,

please do contact us at Karen Associates PC on the web at capclaw.com, and you can send us an email at info at capclaw.com, and look forward to talking to you soon. Thank you.