Non-disclosure Agreements in a Monumental New Landscape

By Mark Petrolis

With the rise of the #MeToo movement, we have heard stories of women who were afraid to previously come forward against their perpetrators, due to the impenetrable barriers created by Non-Disclosure Agreements (“NDA”) these women signed, often with their (former) employers.

It has always been difficult for victims of sexual harassment and misconduct to come forward. Often these victims feel guilty, shame, and are just plain terrified to do so. However, if these victims signed an NDA, the potential legal consequences of them breaking an NDA may keep them silent. Often, NDAs have clauses for monetary damages, particularly attorneys’ fees if a person violates an NDA. Now a victim who may potentially want to move forward could be restrained by their NDA and forego the possibility of legal recourse.

NDAs have been historically used to protect a company’s confidential and/or proprietary information. This included trade secrets, like customer lists or highly developed processes.  Historically, NDAs were never intended to protect an Employer from their wrongdoings, but to shield their innovations from misappropriations.

In conducting legal research, I could not find a case that goes directly to the questions whether an NDA has been held unenforceable due to one of the parties bringing a sexual assault/misconduct claim. However, courts can turn to an abundance of case law involving whether an NDA is enforceable.

Indeed, courts have stated that NDAs are unenforceable if they go against public policy. Further, jurisdictions, all over the country have overwhelming held that public policy dictates that sexual harassment and sexual misconduct must be prevented in the workplace. Given this precedent, a court could likely hold that an NDA would be unenforceable against a victim who brings a sexual harassment/misconduct claim against her employer.

However, gauging how courts will rule on novel legal issues based on case law is never certain. Thus, legislation that categorically prevents NDAs to be enforceable in matters where sexual misconduct is at issue would provide the most legal certainty. Given the #MeToo’s wave for social change, enacting such a federal law may be a real solution to this growing problem.