Non-disclosure agreements (NDAs) have suddenly become controversial. The use of NDAs in the context of protecting sensitive commercial information and trade secrets continues to pose no immediate problem. However, solicitors instructed to produce a document designed to prevent one party from complaining or seeking support for alleged abuse within the workplace, even at a subtle level, must now proceed with the utmost caution.
In March 2018, the Solicitors Regulation Authority (SRA) issued a warning regarding the use of NDAs which are designed to:
- Make a person feel they cannot notify the SRA, a law enforcement agency or industry regulator
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”.
- Threaten litigation or other adverse consequences, or exert inappropriate influence over people as a means of preventing disclosures of behaviour which are protected by statute, or reportable to regulators or law enforcement agencies.
The reasons behind the warning links back to the #MeToo movement.
Harvey Weinstein and attempts to gag women complaining of sexual harassment/abuse
In 2017, The New York Times and The New Yorker broke the story about former Hollywood mogul, Harvey Weinstein’s alleged behaviour which, as more and more women came forward, possibly involved sexual harassment, rape, and abuse of hundreds of women.
Many of Weinstein’s victims were gagged by Non-Disclosure Agreements (NDA’s) which is one of the primary reasons why it took so long for the allegations to come to light. His behaviour was widely known within the entertainment industry, but in part due to NDAs (as well as being subjected to intimidation and threats to their careers), victims did not come forward.
Weinstein’s former assistant, Zelda Perkins, broke her NDA and spoke to the media and the Women and Equalities Committee inquiry into sexual harassment in workplaces. She told the Guardian that as part of a Settlement Agreement, she and her colleague signed an NDA. Negotiations were harsh, including one session that lasted from 5pm to 5am and Ms Perkins and her colleague were refused pen and paper and were accompanied to the toilet.
Neither women were permitted to keep a copy of the NDA. One of the most concerning aspects of the document is it forbade the signees from speaking to anyone about their experience at the hands of Weinstein, and this included counsellors and family members.
SRA urged to get tough on solicitors regarding NDAs
In June 2019, the House of Commons Women and Equalities Select Committee stated the SRA should get tough on solicitors who do not meet high ethical standards when drafting NDAs.
Committee Chair, Conservative MP Maria Miller, said organisations have a duty of care to provide a safe place of work for staff, including protection from unlawful discrimination.
The Report urged the SRA to draft guidance on “reporting up” within their own firm or client organisations concerns regarding systemic issues with culture and discrimination, or about repeated or ‘especially worrying’ allegations of improper behaviour by a particular individual or department. Guidance should also be given on how to balance reporting such occurrences with other professional obligations to the client.
In a statement the The Law Society said:
“We have sought to lead an open and frank discussion within the legal community about the use of NDAs and confidentiality clauses. This includes supporting solicitors to navigate the complex, legal, regulatory and ethical boundaries. As the committee’s report sets out, a number of improvements can be made to protect employees more effectively, such as widening access to legal aid and improving the tribunal process. We regularly review our guidance to solicitors and update as law and regulations evolve.”
The SRA has suggested that employees be given a “cooling-off” period before signing an NDA as well as a “clear statement in a prominent position” about what an NDA legally cannot exclude.
The regulator admits there are concerns in the industry regarding a one-size fits all clause being overly restrictive.
We will ensure to keep you updated as the issues around this controversial and sensitive subject receive more clarification.
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