Over one-third of the US workforce is bound to their company by a non-disclosure agreement (NDA). NDAs can force employees to be silent about anything from trade secrets to sexual harassment and assault and have been growing in number as companies become increasingly worried about competition and reputation. It is important as an employee to understand what your employer is asking you to sign. To learn more about NDAs and the workplace, read below:
An NDA in the workplace is a legal contract that keeps employees from revealing their employer’s secrets. The NDA creates a confidential relationship between the employee and their employer. The NDA stipulates the information that is to remain confidential and how information can be used.
- You may be asked when you are hired to sign an NDA, to keep the company’s trade secrets or business strategies confidential. An NDA and a non-compete agreement limiting who you can work for in your next job may be contained together in the agreement you sign when you are hired.
- If you are terminated, you may be asked to sign an NDA in exchange for a severance payment. Since employers are generally under no legal obligation to provide a severance agreement, this strategy is designed to prevent you from disclosing the terms of the severance and possibly that you received one at all. The severance agreement may also contain a release limiting the conditions under which you can file a lawsuit against the company.
- Employers often use NDAs to keep the terms of settlement agreements confidential, which may also have the effect of preventing toxic practices within their workplace, including sexual harassment, from being exposed or known to other employees who may have similar experiences.
The specific terms of an NDA will differ depending on the circumstances. The information that may be covered by an NDA is virtually unlimited. Generally, by signing an NDA, you promise to not release the confidential information shared with you by your employer.
No survivor is obligated to share their story. Some survivors prefer to keep the harassment or assault private and willingly enter into an NDA. However, NDAs can have significant consequences. For example, the NDAs used in sexual harassment cases can enable the person or company to repeat the same harassment and assault for decades by silencing victims from warning other’s about the behavior.
Pending bills in state legislatures across the country, currently including in California, New York, and Pennsylvania, would prohibit employers from requiring employees to sign agreements that block them from exposing alleged workplace sexual harassment.
If you are a victim of sexual assault or harassment in the workplace and you have signed an NDA, you may still be able to break your silence. Because NDAs can differ, you should consult with an attorney to discuss whether you will be vulnerable to legal action for violating settlement terms or for defamation.
You should consult a lawyer before breaking the terms of an NDA. If you’re bound by an agreement not to disclose trade secrets, there is a chance that the language could be construed to cover any public statements about what happens in the workplace, although it’s not yet clear whether that argument would hold up in court.
As an employee, you may be asked to sign an NDA as a condition of employment, as part of a severance package, as part of a settlement agreement or in a personal context.
· Check for liquidated damages provisions which specify a cash amount an employee must pay per breach of an NDA. If the number is very high, it may create a dynamic where employees are terrified to come forward even about illegal company behavior because they are afraid of being sued. Courts may throw out a provision where the damages/penalties for violating the agreement are much greater than the harm caused to the company when the agreement is violated.
· Time limits that go on for your entire lifetime are overreaching and should raise a red flag. They may be considered reasonable by a court if they are for a shorter period of time, but that will vary by state.
· Forced arbitration clauses or clauses requiring private and confidential arbitration rather than in a public court of law. While those clauses may be legal to include, you should be aware of what they mean.
If what you are told is different from what you see in the written agreement, you need to clarify before signing because the written agreement is binding. Additionally, if the NDA prevents you from bringing discrimination or harassment claims to the proper authority than the NDA is unenforceable.
If you are unsure about the terms of your agreement, you should speak with a lawyer for further clarification.
“Nothing prevents [Your Name] from using his/her own generalized skill, knowledge or expertise that he/she already had, or is publicly available.”
Including this clause in an NDA puts the burden on the employer to prove what you already knew in the case of an alleged breach.
· Any information that employee has prior knowledge of or gained from sources other than their employer
· Any information that is common knowledge in a field
Additionally, an NDA is not meant to protect a company from doing something illegal. If your company has unethical or illegitimate business practices, you still have a right to whistleblow (inform) to proper authorities.
An NDA also cannot prohibit an employee from filing a sexual harassment complaint with the Equal Employment Opportunity Commission.
A unilateral NDA is more commonly used. It is used when a business or employer discloses information to their employee, and the employee receives the information and agrees to keep the information confidential.
A mutual NDA is used when the two parties agree keep confidential each other’s information. The mutual NDA is generally used between businesses.
A nondisparagement clause generally prevents an employee from saying anything negative about the company, even on social media. Nondisparagement clauses have gained popularity in the startup world where they are often used to hide the sexist culture in the tech industry. If you are subject to a nondisparagement clause, it is best not to publicly discuss your employer, and especially not online, where proof of your comments could be saved as evidence of a violation. Consult with an attorney to review the agreement before speaking out, even anonymously.
Some have interpreted this statute to apply to both businesses and individuals. Therefore, under this language of this statute, victims of workplace sexual assault or harassment who settle their claims subject to an NDA, would be prohibited from deducting the portion of their settlement allocated for attorney’s fees, and would have to pay taxes on the entire amount they were given for the settlement.
As a result of this uncertainty, Sen. Robert Menendez has announced plans to introduce legislation clarifying that §162(q) is meant to apply only to businesses/employers. In the meantime, you should consult with a tax attorney or accountant knowledgeable in this area to determine what amounts of your settlement payment are deductible.