Silenced No More: Preventing Workplace Discrimination Through Nonenforcement of Confidentiality Agreements

Photo by Diverse Stock Photos on Flickr

Mallory Perazzo, Associate Member, University of Cincinnati College of Law

I. Introduction

The #MeToo movement exposes the need for accountability in discrimination and sexual harassment claims and has shed light on the danger of confidentiality agreements.  These agreements are highly controversial, as they allow perpetrators to go unnoticed by the public by silencing their victims, which may reinforce the behavior and lead to continued discrimination.  However, these are often mutually agreed upon contracts, implying that both parties receive some benefits from signing them.  Nevertheless, state governments, and perhaps the federal government, may be moving away from enforcing these contracts due to policy concerns. 

California has strict statutes on the subject, and recently passed the Silenced No More Act (“SNM Act”), which restricts companies from using confidentiality agreements to prevent current or former workers from making public complaints about discrimination in the workplace.[1]  In other words, the state made nondisclosure agreements (“NDAs”), also referred to as hushing contracts or confidentiality agreements, virtually unenforceable.[2]  While California is not the only state to limit the enforceability of NDAs, this statute is unique in that it does not just limit enforceability of confidentiality agreements in cases of sexual harassment, but also in cases of discrimination based on protected classes.

This article argues that states, as well as the federal government, should follow California’s lead in providing protection for victims of all forms of discrimination.  Most confidentiality agreements that silence discrimination claims cause more harm than good and allow power imbalances to remain in place.  Part II of this article will discuss California’s treatment of confidentiality agreements as compared with other states and the federal government.  Part III will weigh the advantages and disadvantages of confidentiality agreements and discuss why states should be reluctant to enforce the agreements. 

II. Background

The federal government has long recognized the importance of permitting the publication of harassment claims, although these ideals have not always been successfully and practically enforced.  Title VII of the Civil Rights Act of 1964 makes it unlawful for an employer to retaliate against an employee for reporting, either internally or publicly, workplace discrimination.[3]  However, case law suggests that when an employee’s complaints are unreasonably disruptive, that protection can disappear.[4]  Like Title VII, the National Labor Relations Act (“NLRA”) also limits the employer’s ability to enforce contracts that prevent workers from discussing employment conditions, including harassment.[5]  Employers are also prohibited from interfering with workers’ rights to report violations to enforcement agencies, such as the Equal Employment Opportunity Commission (“EEOC”) or to report crimes to law enforcement.[6] 

Two additional federal bills were introduced in 2019 which would address workplace harassment and silencing victims.  The first is the Bringing an End to Harassment by Enhancing Accountability and Rejecting Discrimination (“BE HEARD”) in the Workplace Act.  It would prevent and respond to workplace harassment by including a ban on pre-dispute NDAs that prohibit workers from disclosing harassment or other forms of discrimination or retaliation by federal anti-discrimination law.[7]  The second federal bill, titled the Ending the Monopoly of Power Over Workplace Harassment Through Education and Reporting (“EMPOWER”) Act, also would prohibit employers from forcing employees to sign pre-dispute NDAs that silence workplace harassment.[8]  Both bills have yet to be passed.[9]

Some state governments have also attempted to outlaw the silencing of victims, which has resulted in states enforcing confidentiality agreements to varying degrees.  Following the #MeToo movement, more than fifteen states introduced bills to address the use of NDAs in sexual harassment claims.[10]  Many of the statutes that were passed render NDAs unenforceable when the intent of the contract is to silence victims of sexual harassment, particularly in settlement agreements.[11]  However, states might provide exceptions, such as permitting victims to request confidentiality, or allowing for provisions to keep the monetary value of the settlement confidential.[12]  Until recently, statutes which limited enforcement of confidentiality agreements generally only restricted the use of those agreements as they related to sexual harassment.  For example, in 2018, California passed the Stand Together Against Non-Disclosure Act (“STAND Act”).[13]  The STAND Act prohibits settlement agreements that prevent the disclosure of facts related to sex-based assault, harassment, or discrimination.[14]  The STAND Act did not, however, prohibit NDAs that prevent disclosure of other illegal harassment or discrimination in employment, including race, age, religion. 

In 2021, California passed a new, more radical statute to expand the types of discrimination an employer cannot silence through an NDA.  The SNM Act expands the STAND Act, prohibiting NDAs related to workplace harassment or discrimination on any basis prohibited under California’s Fair Employment and Housing Act (“FEHA”), including race, disability, religion, and sexual orientation.[15]  Importantly, both acts only apply to claims filed in civil or administrative actions, but not to settlements reached prior to filing suit.[16]  Both permit the dollar amount of the settlement to be kept confidential, and also permit an employee to request confidentiality of facts that would reveal his or her identity.[17]  The SNM Act also expands on a 2018 California law that restricted the use of non-disparagement agreements, which restrict a party from saying anything negative about another party.[18]  While the 2018 law restricted non-disparagement provisions in cases where the agreement would prevent employees from disclosing unlawful workplace conduct, the new law applies to nearly any agreement related to an employee’s separation from employment.[19]

III. Discussion

A. The Costs of Enforcing the Agreements

Nondisclosure agreements are rightfully controversial, as there are compelling advantages of enforcing such contracts.  First, and probably foremost, victims of discrimination receive benefits from signing NDAs.[20]  The most measurable benefit is typically money.  One may argue that victims should be able to use their own bargaining power to accept cash in exchange for their silence.  This is convincing considering many subjects of discrimination and sexual harassment feel unable or unwilling to share their experience regardless of compensation.[21]  After all, the freedom to contract is inherent in our legal system.  Another argument for enforcing NDAs is that NDAs promote settlements, which increase judicial efficiency.[22]  Finally, one may argue that the victim’s ability to seek relief outweighs the public’s right to know when a company commits discrimination.[23] 

The disadvantages of NDAs are systemic; the contracts perpetuate discriminatory behavior.  When victims are silenced, companies are more likely to keep the employees engaged in wrongdoing and forgo meaningful change in workplace culture than if the issue was publicized.[24]  By not holding the wrongdoers accountable, continued discrimination and acts of sexual harassment are more likely.[25]  Furthermore, the enforcement of hushing contracts prevents the public, including current and prospective employees, from knowing whether a company has retained an employee that has committed sexual harassment regardless of their level of due diligence.[26]  Finally, hushing contracts have more measurable costs as well, including increased turnover and lack of productivity due to continued sexual harassment.[27]

While there are advantages of enforcing contracts, the drawbacks of silencing victims of discrimination outweigh those advantages.  Restricting enforceability of these contracts aims to prevent the crimes, which is more efficient than offering relief for victims.  The widely known #MeToo movement is a relevant example of how enforcing NDAs enables perpetrators to commit repeat offenses.  Over eighty women have accused the Hollywood mogul, Harvey Weinstein, of sexual misconduct, sharing events that have occurred at least as far back as the early 1990s.[28]  However, the Weinstein Company notoriously required employees to sign NDAs and non-disparagement agreements.[29]  In the words of the district attorney, the serial sexual predator used his power to “threaten, rape, assault, trick, humiliate, and silence his victims.”[30]  Weinstein’s behavior did not change until a brave woman finally broke her nineteen-year-old contract, and spoke up about the harassment she faced.[31]  Changing the way we treat NDAs is not a cure-all to end sexual harassment and other violent sexual misconduct, but it is a necessary step to prevent repeat offenses and to deter people in positions of power from committing the misconduct in the first place. 

B. Discussing Options for Legislators and Courts

 Federal protective statutes, such as Title VII and the NLRA, provide a floor to protecting employees from being silenced by their current and former employers in cases of discrimination, but the statutes do not complete the important task.  One of the shortcomings is that these federal laws do not apply to all workers, and instead apply only to those employed by qualifying hiring entities.[32]  A second flaw is that employers continue to put these provisions in their contracts, misleading employees to believe that they are enforceable, thus making them effective in practice.[33]  By contrast, California’s SNM Act protects those employed by private and public employers of any size.[34]  This is an important distinction, and governments should value protecting all workers instead of leaving large and often arbitrarily defined groups vulnerable.  A meaningful step in that direction would be for Congress to pass the bills that have been proposed to limit enforcement of NDAs-—the HEARD Act and the EMPOWER Act.

States that limit the enforcement of confidentiality agreements in cases of sexual harassment are making progress, but their efforts fall short of covering the scope of the problem if they do not cover other cases of discrimination.  There are countless stories of discrimination based on a protected class other than gender that illustrate the need for California’s new statute.  One story in particular depicts an example of the gaps that California’s STAND act fills.[35]  Two African American women, Ifeoma Ozoma and Aerica Shimizu Banks, experienced pay discrimination and racism while they were working for Pinterest.[36]  Inspired by the leaders’ brave expression of their stories, other employees from the company began to come forward with their own accounts of racial and gender discrimination.[37]  Narratives came out about racial comments, such as a supervisor suggesting the only black person on the team to act as the company servant, and another manager expressing surprise that an advertisement depicting a black woman was successful.[38]  Ozoma and Banks eventually settled their claims, and California’s STAND Act protected their right to share their gender-based discrimination claims, but not their racial discrimination claims.[39]  This is problematic for anyone experiencing intersectional discrimination claims, such as Ozoma and Banks, but also for anyone that is experiencing discrimination based only on a protected class other than gender.  Unfortunately, Pinterest is not an outlier in receiving these types of complaints, especially among the Silicon Valley tech and startup companies, which often exhibit biases toward Black people and therefore need stated added protections.[40]

Statistics also show that protecting victims of sexual misconduct, but no other forms of discrimination is arbitrary and fails to address the full issue around silencing victims.  For the past two years, race discrimination charges filed with the EEOC outweighed those of sex discrimination.[41]  In 2020, the most recent recorded year, sex discrimination cases filed made up only 31.7% of all discrimination claims filed.[42]  Governments passing laws around workers’ rights to speak out about their experiences with discrimination should be careful not to exclude nearly 70% of discrimination claims.

In addition to policy concerns which should lead legislators to enact laws against the enforcement of contracts that hide discrimination, perhaps courts can refuse to enforce these contracts on a more substantive legal basis.  Senator Connie Leyva has described an employer seeking to silence the voices of survivors of racist, sexist, homophobic, and other attacks at work as unconscionable.[43]  Unconscionability is a defense against the enforcement of a contract or a provision of a contract.[44]  Contracts may be found unconscionable if both unfair bargaining and unfair substantive terms are shown, which is often proven by an absence of meaningful choice by the disadvantaged party.[45]  It is likely that many victims of discrimination lack a meaningful choice of whether or not to keep their employer’s secret for fear of retaliation.  Likewise, non-cooperation provisions are common, which contractually forbid a party from assisting others in pursuing litigation against the other party.[46]  One legal scholar has argued that these provisions are unethical because they are “prejudicial to the administration of justice,” while another has gone as far as to argue that attorneys commit obstruction of justice when they request such provisions.[47]  Courts should consider applying this type of analysis to confidentiality contracts on a case-by-case basis.

IV. Conclusion

Federal and state governments should prioritize the prevention of all workplace discrimination.  Many bodies of government have implemented restrictions on guarantees of silence around discrimination, but most are not taking the necessary minimum steps.  By enforcing confidentiality agreements that silence victims of any form of discrimination, the law is perpetuating power imbalances and enabling perpetrators in committing (often repeated) wrongdoings.  Legislators and courts should look to California’s new Silenced No More Act as an initial step to holding offenders accountable. 

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^[1] 2021 Legis. Bill Hist. CA S.B. 331.

[2] See David A. Hoffman & Erik Lampmann, Hushing Contracts, 97 Wash. U. L. Rev. 165 (2019).

^[3] EEOC v. Crown Zellerbach Corp., 720 F.2d 1008, 1014 (9th Cir. 1983) (holding that it was a violation of Title VII to impose adverse employment decisions on employees for providing a public protest letter to a major customer, reasoning that although the letter could harm the employer, it was reasonable because it did not interfere with job performance).  See also Elizabeth Tippet, Non-Disclosure Agreements and the #MeToo Movement, American Bar Association (Winter 2019), https://www.americanbar.org/groups/dispute_resolution/publications/dispute_resolution_magazine/2019/winter-2019-me-too/non-disclosure-agreements-and-the-metoo-movement/.

^[4]Matima v. Celli, 228 F.3d 68, 78-79 (2d Cir. 2000). See also Enforcement Guidance on Retaliation and Related Issues, U.S. Equal Emp. Opportunity Comm’n (Aug. 25, 2016), https://www.eeoc.gov/laws/guidance/enforcement-guidance-retaliation-and-related-issues.

^[5] Limiting Nondisclosure and Nondisparagement Agreements that Silence Workers: Policy Recommendations, Nat’l Women’s L. Ctr. (April 2020), https://nwlc.org/wp-content/uploads/2020/04/NDA-Factsheet-4.27.pdf.

^[6] Id.

[7] Limiting Nondisclosure, supra note 5, at 3.

[8] Id.

[9] Id.

^[10] Tippet, supra note 3.

[11] Id.

^[12] Id.

^[13] 2018 Legis. Bill Hist. CA S.B. 820.

^[14] William Jhaveri-Weeks & Ally Girouard, Calif. NDA Law May Have Surprising Effect on Settlements, Law 360 (Oct. 26, 2021).

^[15] Id.

^[16] Id.

^[17] Id.

^[18]  Cal. Gov’t Code §12964.5 (Deering 2021).

^[19] Jhaveri, supra note 9.

[20] Hoffman, supra note 2, at 184.

[21] Id.

[22] Id.

[23] Id. at 187.

[24] Id. at 174.

[25] Id.

[26] Id. at 178.

^[27] Id. at 174.

^[28] Richard Drew, The Harvey Weinstein Trial: A Brief Timeline Of How We Got Here, NPR (Jan. 22, 2020).

^[29] Id.

^[30] Sara M. Moniuszko & Cara Kelly, Harvey Weinstein Scandal: A Complete List of the 87 Accusers, USA Today (June 1, 2018).

[31] Hoffman, supra note 2, at 167.

[32] Questions and Answers: The Application of Title VII and the ADA to Applicants or Employees Who Experience Domestic or Dating Violence, Sexual Assault, or Stalking, U.S. Equal Emp. Opportunity Comm’n (Oct. 12, 2012), https://www.eeoc.gov/laws/guidance/questions-and-answers-application-title-vii-and-ada-applicants-or-employees-who.

[33] Governor Newsom Signs Senator Leyva’s “Silenced No More Act,” Senator Connie M. Leyva Representing the 20^th District (Oct. 7, 2021), https://sd20.senate.ca.gov/news/2021-10-07-governor-newsom-signs-senator-leyva%E2%80%99s-%E2%80%9Csilenced-no-more-act%E2%80%9D.

[34] Id.

^[35] Id.  

^[36] Nitasha Tiku, Black Women Say Pinterest Created a Den of Discrimination—Despite its Image as the Nicest Company in Tech, The Wash. Post (July 4, 2020).

^[37] Id.

^[38] Id.

^[39] Governor Newsom Signs, supra note 33. 

^[40] Tiku, supra note 20.

[41] Charge Statistics (Charges filed with EEOC) FY 1997 Through FY 2020), U.S. Equal Emp. Opportunity Comm’n, https://www.eeoc.gov/statistics/charge-statistics-charges-filed-eeoc-fy-1997-through-fy-2020.

[42] Id.

^[43]Governor Newsom Signs, supra note 33. 

^[44] Unconscionability, Legal Info. Inst., https://www.law.cornell.edu/wex/unconscionability.

^[45] Id.

[46] Tippet, supra note 3.

[47] Id.