States and local governments should prohibit employers from using non-disclosure and non-disparagement agreements to keep employees from speaking out about sexual and other types of harassment, the American Bar Association says.
“NDAs … have effectively resulted in silencing people who experience sexual assault, sexual harassment, and other forms of harassment and discrimination in the workplace, preventing accountability for those who commit these harms and allowing the behavior to persist,” the ABA says.
The trade group this week passed a resolution urging governments to enact laws restricting employers’ use of NDAs to what they’ve traditionally been used for – protecting trade secrets and other proprietary information – and not letting them be used to keep employees from coming forward about harassment.
“Their use has increased significantly in recent years with much broader applications,” the group says.
About a third of employees, including lower-level employees whose job doesn’t necessarily put them in contact with trade secrets or proprietary information, are under some form of NDA, the ABA says.
Federal law prohibits the agreements from being used to prevent employees from asserting their rights to be free from sexual harassment or other illegal acts, and it also ensures employees can respond to questions about workplace conditions from enforcement agencies like the Equal Employment Opportunity Commision. But employees either don’t know this or they’re reluctant to test their protections when they can face ruinous financial penalties for violating an NDA, the ABA says.
“NDAs may result in confusion on the part of employees who believe they are prohibited from reporting unlawful behavior to enforcement agencies, cooperating with investigations, discussing working conditions with co-workers, or engaging in other protected activity,” the group says.
President Joe Biden in 2022 signed a law, called the Speak Out Act, that prohibits pre-dispute NDAs from being used to keep employees from reporting sexual assault and harassment. The ABA resolution would have state and local governments go further by expanding it to include post-dispute agreements, like severance agreements that are part of a settlement. It would also expand the prohibition to include all types of harassment and discrimination, not just those involving sexual misconduct.
“I urge that we extend this to all protected statuses,” Kay Hodge, an ABA delegate, said in a statement. “It’s all kinds of harassment.”
The resolution comes at a time when employers could be turning to NDAs even more if a nationwide ban on noncompete agreements takes effect this fall. The Federal Trade Commission passed the ban, but it faces court challenges, one of which has resulted in a partial stay.
Should the ban take effect, employers are likely to lean more heavily on other types of agreements, like non-disparagement agreements and other types of NDAs, to protect their interests from employees who leave to work for a competitor or to start a competing business.
