What Happens If Someone Breaks a Non-Disclosure Agreement?

March 2, 2018
by Nicole Einbinder Abrams Journalism Fellow, FRONTLINE/Columbia Journalism School Fellowships

For decades, Harvey Weinstein was able to keep his accusers quiet.

One of the reasons: the powerful movie mogul used elaborate legal agreements — non-disclosure agreements — designed to enforce unbreakable silence.

“We were not allowed to speak to anybody obviously, friends, family, press, public, private, about the alleged behavior, but also about our time at Miramax,” Zelda Perkins, a former assistant to Weinstein, said in an interview for the FRONTLINE documentary Weinstein. “This wasn’t a normal confidentiality agreement. This wasn’t us saying that we weren’t gonna, you know, give away corporate secrets. This was a deeply, personally binding agreement.”

Perkins told FRONTLINE that she and a colleague — who accused Weinstein of attempting to rape her — signed a non-disclosure agreement. They agreed not to speak about the incident in exchange for a financial settlement of around $200,000. Perkins also insisted on measures to protect other Weinstein employees at Miramax from future harassment.

Weinstein used NDAs with multiple women who accused him of misconduct, settling their claims confidentially. In a statement to FRONTLINE, Weinstein denied the attempted rape allegation. He also said, “Over a period of 30 years, there were actually less than 10 settlements of harassment claims … None of these settlement agreements prevented any individual from going to the police had they wished to do so.”

Multiple Weinstein employees have come forward in recent months to discuss their NDAs. Some of these agreements included clauses that prevented employees from discussing details of Weinstein’s “personal, social or business activities,” according to The New Yorker

NDAs are legally enforceable contracts, but they’re now coming under increased scrutiny from lawmakers, attorneys and legal experts. Some states have even introduced legislation to ban them altogether when they involve claims of sexual misconduct.

Companies often use them as part of an employment contract or settlement agreement to protect sensitive information — like trade secrets. Their provisions can differ: some restrict parties from discussing settlement amounts, while others bar them from disclosing anything related to the underlying dispute.

But over the years, legal experts say, these confidentiality agreements have also crossed into more personal matters, often used by powerful men in cases of alleged sexual harassment or assault.

“The actual purpose of a non-disclosure agreement is not a matter of concealing embarrassing or criminal acts by a company,” said Max Kennerly, an attorney in Philadelphia, who has written on these issues. “Outside of a trade secret where a company has a genuine business reason to keep something very closely contained, every single one of these non-disclosure agreements in a sexual harassment or sexual assault case is buying silence or attempting to buy silence.”

In practice, when somebody breaks a non-disclosure agreement, they face the threat of being sued and could be required to pay financial damages and related costs. But legal experts say there’s limited case law on whether contracts like NDAs to settle sexual harassment claims can be enforced. In fact, many experts say such agreements could be declared void if a judge determines that enforcing one would essentially violate public policy. For example, a contract related to a crime.

Rather, they say, these contracts act more as a scare tactic against victims unsure of the consequences of speaking out.

“There’s not a lot of law figuring out whether they are enforceable because generally people don’t breach these things and don’t want to risk the consequences of litigation,” said Alan Garfield, a law professor at Delaware Law School. “There was sort of a natural conspiracy to have silence: the perpetrators wanted it and the victims maybe wanted it to go away, and didn’t want to risk litigation or giving their money back.”

Those who sign NDAs can generally still talk in certain circumstances, like if they are subpoenaed or are reporting to an enforcement agency, such as the federal Equal Employment Opportunity Commission. But since the language in NDAs can often be confusing, many people who sign them don’t even realize those exceptions exist — or are too scared to try, according to Jenny Yang, a former commissioner and chair of the EEOC.

“The risks of being sued and having to defend yourself and potentially having to pay, usually there is a big penalty, is very intimidating to people,” Yang said. Some in Hollywood don’t have the option of going to the EEOC: independent contractors, including many actors and actresses, aren’t considered employees and therefore aren’t protected under Title VII, the main federal protection against sexual harassment in the workplace.

While the actual enforceability of these contracts remains a topic of debate, many experts do agree that for the women who spoke out against Weinstein, it’s unlikely he would take legal action. “Could you imagine Harvey Weinstein suing somebody for breaching a non-disclosure agreement to not reveal that he is a monster who is attacking women?” Garfield said. “That would seem like a continuation of the abuse.”

While Weinstein’s alleged victims have increasingly spoken out, Lenora Lapidus, director of the Women’s Rights Project at the ACLU, acknowledged that other vulnerable women who enter into similar agreements may not feel as safe doing so.

“Those working in the restaurant industry and the hotel industry, women farm workers, domestic workers — for them every dollar makes a huge difference and so the threat of losing any money that they may have gotten as a result of a non-disclosure agreement, or being sued, that threat will keep them silent,” Lapidus said. “That’s where that money is essential, and they’ve probably spent it already by the time they might be considering speaking out.”

In response to the Weinstein scandal, legal experts have proposed new measures to reform the use of NDAs. Samuel Estreicher, a law professor at New York University, suggested that the EEOC keep track of companies that settle sexual harassment cases and investigate those that use them repeatedly for the same employees. Lapidus argued that before a person signs a NDA, they should be informed of their right to speak with an attorney or report to an enforcement agency.

At least 10 states have also introduced or enacted legislation since 2017 related to sexual harassment in the workplace, according to the National Conference of State Legislatures. States across the country, including California, New York and Pennsylvania, have specifically targeted confidentiality or non-disclosure agreements — including some proposals to do away with these contracts entirely in settlements involving sexual harassment claims.

But doing away with NDAs completely could also give employers less incentive to settle cases, said Wendy Netter Epstein, a law professor at DePaul University. She added that harassers, no longer bound by a confidentiality clause, could retaliate against their accusers and say things publicly that could harm their ability to secure future employment.

“Many people, after they’ve been through something like this, they didn’t want it to happen, they didn’t bring it upon themselves and they just want to put it behind them and go on with their lives,” said Paula Brantner, senior adviser for Workplace Fairness, a nonprofit organization that promotes employee rights. “And so, some think the non-disclosure agreement is the best way to do that.”

Going forward, many experts agree that while some non-disclosure agreements are appropriate, others aren’t, and that there needs to be a better system in place to decipher one from the other — whether that be through legislation, the courts, or other measures to keep companies more accountable when addressing sexual misconduct.

“The damaging power of NDAs is they scare women into silence,” Lapidus said, “and often even into silence that they’re not legally obligated to maintain.”

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