“Is It Time To Rethink Non-Disclosure Agreements In The Wake Of #MeToo?”

“Is It Time To Rethink Non-Disclosure Agreements In The Wake Of #MeToo?”

Friday, May 24, 2019

Adam Convisser, Employment and Corporate Partner

Due to the growing public awareness of allegations of sexual abuse and harassment by former Hollywood mogul, Harvey Weinstein and other powerful players, the #metoo movement sprung up.  Now, almost every industry (including law) is dealing with the consequences of the reprehensible behaviour and culture of certain individuals and organisations.

What is an NDA?

An NDA, also known as a Confidentiality Agreement or, colloquially, a “gagging order”, is a legally enforceable contract where one party agrees not to divulge confidential information (usually relating to the other party) to anyone else.

What types of NDAs are under scrutiny?

Originally, NDAs were developed to protect trade secrets, and are still widely used for this purpose today.  These types of NDAs do not pose a concern.  In March 2019, the Solicitors Regulation Authority (SRA) issued a warning regarding NDAs which are designed to:

  • Make a person feel they cannot complain to a law enforcement agency or industry regulators about conduct that would otherwise be reportable.
  • Result in a failure to notify the SRA of misconduct “or a serious breach of our regulatory requirements, by any person or firm: including wrongdoing by the firm, or harassment or other misconduct towards others such as employees or clients”.
  • Use the threat of litigation or other adverse consequences as a means of preventing disclosures of behaviour which are protected by statute, or reportable to regulators or law enforcement agencies.

The SRA’s warning comes on the back of a Women and Equalities Committee inquiry into sexual harassment in workplaces, in which Zelda Perkins, a former assistant to Weinstein, testified.

Ms Perkins broke her NDA in deciding to speak out.  She had worked for Weinstein in her early 20s and resigned after he allegedly sexually assaulted and attempted to rape one of her colleagues.  Weinstein has emphatically denied these and all other allegations made against him.

She told the Guardian that as part of a Settlement Agreement, she and her colleague signed an NDA.  However, she pointed out the negotiations were over two days, the first session lasting from 5pm to 5am the next morning.  The pair then had to return to negotiations at 11am for another six-hour session.  During that time, Ms Perkins and her colleague were not allowed pens or paper and were escorted to the toilet.

Once the NDA was signed, they were not allowed to keep a copy.  They were forbidden by the agreement to tell a therapist or any members of their family about what had happened.

Although Ms Perkin’s NDA was particularly draconian in its execution and terms, such documents do exist outside the sphere of celebrity and media.  For example, as widely reported by the media in January 2018, young women employed as hostesses and waitresses at the all-male Presidents Club dinner were obliged to sign NDAs that were intended to prevent them from talking about groping and other harassment by paying guests.

Whilst existing laws provide that intimidation/duress can render an NDA unenforceable, clarity is still awaited from Parliament on NDAs of the type described above and generally on this rapidly changing and complicated area of law.

What actions can employers take to protect their reputations and prevent the need for an NDA

The first thing employers need to ensure is that they have a clear, legally compliant investigation procedure in place to deal with allegations of sexual harassment and other forms of discrimination.  Not only will this prevent the risk of reputational damage if allegations are not correctly looked into and dealt with (by having the necessary HR systems in place), but the culture of the workplace will also change so that inappropriate behaviour is known to be unacceptable.

There is pressure mounting on Parliament to pass a law to outlaw NDAs that prevent employees being able to seek help and/or report illegal behaviour.  In the meantime, if you have any concerns about an existing NDA you have with a former employee or need advice on putting in place policies and procedures to manage grievances, please get in touch with Adam Convisser, a partner in our Employment Team.