Nondisclosure agreements have emerged as one of the most routine legal documents that American workers sign. By 2018, a third of the U.S. workforce had a gag clause in their contract, according to a report from Harvard Business Review. At first created to protect company trade secrets, NDAs evolved into a cloak for abusive bosses. Harvey Weinstein and former President Donald Trump intimidated their employees with NDAs, but that’s all changing now: Thanks in part to the #MeToo movement—and to a small number of employees in the tech sector—the floodgates have been opened for new laws banning the practice in states across the country.
Tech workers in California and Washington State led the charge last year in their state legislatures and with the recent passage of a federal ban on forced arbitration in the workplace; labor advocates are striking while the iron is hot and pushing Congress for a national ban on NDAs in sexual harassment and assault cases.
In April, New York Assembly Member Jessica González-Rojas, along with state senators Alessandra Biaggi and Andrew Gounardes, introduced legislation in the state senate that would ban employers from including NDAs and non-disparagement clauses in settlement agreements and employment contracts. The bill—formally known as the Stop Silencing Survivors Act to Ban Non-Disclosure Agreements—was spearheaded by the Sexual Harassment Working Group, a collective of former staff for state elected officials who experienced discrimination. Gounardes hopes to usher the bill through the swift legislative session, which ends June 2.
New York passed a law in 2018 banning NDAs, except when the complainant prefers the agreement. Complainants are given only 21 days to consider the clause. The law may sound well-intentioned but, in reality, it has created a more coercive process for victims, Gounardes says. The legislation was also passed without stakeholder input, something that Sexual Harassment Working Group cofounder Leah Hebert hopes to change. Hebert suffered repeated harassment from her boss, former Assemblyman Vito Lopez, and later signed an NDA.
“The law is completely disconnected from the reality of the power dynamics between a victim or survivor who is seeking to move on with their life and seeking very real damages,” says Hebert. “It’s really not a choice for a lot of people who are in a state of trauma and they want to move on with their lives. They may also be afraid of getting blacklisted in their field.”
If successful, New York State would become the fourth state behind Washington State, California, and New Jersey to pass a law banning NDAs. In late March, Washington State Governor Jay Inslee signed the Silenced No More Act, a law prohibiting employers from using non-disclosure and non-disparagement agreements to bar workers from speaking out against discrimination, harassment, and sexual assault. Washington State’s legislation, in turn, followed similar action in California, where the October 2021 passage of the state’s own version of the Silenced No More Act protects employees negotiating settlement and severance agreements. Companies are not only feeling pressure from state governments to ban NDAs but from their investors as well. In April, the San Francisco-based Salesforce capitulated to shareholders and extended the California law’s protections to employees across the country.
The California and Washington State bills sprang out of workplace harassment in the states’ tech industries, and both laws prohibit NDAs and non-disparagement clauses. However, Washington’s law goes a step further than California’s, by including retroactive language that would invalidate agreements signed before the law passed.
In Washington State, Cher Scarlett, a software engineer and former Apple employee, and Chelsey Glasson, a former Google employee who had alleged pregnancy discrimination against the company, helped craft the law. And in California, former Pinterest employee Ifeoma Ozoma teamed up with California State Senator Connie Leyva to draft her bill. Ozoma, who is a Black woman, claimed she faced discrimination based on both her race and sex. But the existing law in California covering sex-based discrimination, harassment, and assault, the STAND Act, did not apply to her complaints of racism. The new law signed by Governor Gavin Newsom last fall expands the STAND Act’s ban on NDAs and non-disparagement clauses for any workplace discrimination and harassment.
“With tech workers, part of the reason that we’re able to fight is that we are tech workers,” says Glasson. “There are some industries where your career would be completely annihilated if you were to speak out.”
Workplace equality advocates in New York State would do well to look to the West. Scarlett observed what was happening in California and reached out to Ozoma for her input. She also researched Washington’s law passed in the wake of #MeToo, which banned NDAs that would prevent employees from disclosing sexual harassment or sexual assault in the workplace. That law did not apply to settlement agreements.
After digging into the 2018 law, Scarlett contacted state Senator Karen Keiser but didn’t hear back immediately.
“So every time I talked to the press about what I was dealing with at Apple, I mentioned that I had emailed the senator. So then the press would reach out to her office,” Scarlett says. “Eventually the New York Times reached out to her office, and suddenly it’s happening.”
Scarlett also contacted Gretchen Carlson, one of the two Fox News alumnae who have become champions in the movement to ban NDAs in the workplace. Carlson and Julie Roginsky lead Lift Our Voices, a nonprofit urging bans on forced arbitration and nondisclosure agreements. When employees sign contracts with forced arbitration clauses, they waive their right to take their employer to court, instead settling the dispute with a company mediator. Lift Our Voices successfully lobbied for the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which President Joe Biden signed into law in March. Under the new law, companies can no longer require employees to settle sexual harassment or assault disputes through arbitration.
Carlson’s advocacy stems from her personal experience, one that helped spark the beginning of the #MeToo movement. In July 2016, she filed a sexual harassment lawsuit against Fox CEO Roger Ailes. Carlson sued Ailes, rather than Fox, to circumvent the clause in her contract that would have sent her dispute to arbitration if she had sued the news network itself. After her much-publicized fight, she began hearing from thousands of other women with similar stories.
“All of their cases had gone into obscurity and into silence, into the secret chamber of arbitration,” she says.
“The deck is stacked against you”
Much like NDAs, the use of forced arbitration has become more common among companies over recent years and has soared since the pandemic, according to an October 2021 report from the American Association for Justice, a lobbying group representing trial lawyers. In 2020, just 1.6% of employees forced into arbitration won a monetary award, AAJ found. Mandatory arbitration is more common in industries dominated by female and Black workers, according to a 2018 report from the Economic Policy Institute, a left-leaning think tank.
“The deck is stacked against you from the beginning because the company usually picks the arbitrator for you,” Carlson says. “The arbitrator tends to come back to a repeat business and finds in favor of the company. The stats are dismal in the single-digit percentage of how many times the employee wins, and even if they do, the settlements are much less. The person never works again because they get pushed out of the workforce, and they can’t tell anyone why they lost that company because of secret proceedings.”
Roginsky, who also won a settlement from Ailes and once worked as a top aide to New Jersey Governor Phil Murphy during his 2017 campaign, was barred from talking about her experience on Murphy’s campaign because she had signed an NDA. In 2019, Murphy signed a law banning employers from enacting NDAs in all discrimination, retaliation, or harassment cases, creating one of the most expansive laws in the country covering all protected classes. Yet even with that law in place, Murphy’s attorneys did not release Roginsky from her NDA until January 2020.
With several confirmed allies in Congress who supported the arbitration ban, Lift Our Voices is lobbying for similar legislation that would ban NDAs for sexual harassment and assault cases. While arbitration adjudicates claims in secrecy, NDAs silence workers with agreements they sign either at the beginning of their employment or at their termination in order to receive severance, Carlson says.