Don’t Blame Nondisclosure Agreements for Harvey Weinstein

Since the New York Times published a report on sexually predatory behavior by famed Hollywood producer Harvey Weinstein, a number of women have come forward to recount their allegations of harassment and assault by Weinstein.

The stories are horrific, both in terms of the conduct that is portrayed as well as in how long it seems to have gone on. The Hollywood casting couch, once thought to be a relic of the past, may still be a popular piece of furniture in Tinsel Town.

Do Nondisclosure Agreements Perpetuate Harassment?

One interesting aspect of this spectacle has been the revelation that Weinstein settled at least eight prior lawsuits alleging sexual harassment or assault and that the agreements documenting those settlements contained nondisclosure clauses. These agreements are now coming under scrutiny for their impact in keeping Weinstein’s behavior hidden for so long.

Nondisclosure agreements are routine features of settlements of employment-related lawsuits (and many other legal claims as well). They almost always bar the employee who brought the claim from divulging the terms of the settlement, and often prohibit as well the disclosure of any of the underlying facts that led to the claim being filed.  Nondisclosure agreements are usually intended to insure that a private agreement between an employer and an employee (or ex-employee) remains private.

Critics contend that such agreements just buy the claimant’s silence so that the employer’s wrongdoing stays out of the public eye. If past victims cannot warn future targets, predators will be allowed to continue their hunt.  Some have even suggested that these agreements should not be enforceable because they conflict with a public policy that favors disclosure of wrongdoing.

The Benefits of Nondisclosure

Yet, nondisclosure agreements also prevent injustice against employers. No doubt, some employment cases are settled because wrongs took place that need to be rectified. However, a very significant percentage of settlements in the employment law realm are based on the desire of both sides for certainty of outcome instead of the vagaries of the legal system.  Many more come about because the expense of defending a claim far exceeds the monetary damages being sought.  These “nuisance settlements” are an unfortunate reality when the time, energy, and expense of going to court is simply too great a burden to justify fighting over a few weeks or months of back wages.

Settling cases for these reasons often benefits everyone. Employers avoid costly and extended legal proceedings, employees obtain a swift conclusion to their concerns, and the public policy favoring collaborative, private resolution of disputes is served.  Without nondisclosure agreements, employers would be reluctant to settle most cases out of concern that other employees would just line up with their hands out hoping for their nuisance payment as well.  In addition, a large segment of the populace presumes that an employer is “guilty” any time they settle a case and are prepared to publicly shame that company through a scorched earth social media attack.

In reality, the typical employer does not enter into a settlement agreement with a nondisclosure clause thinking “Oh good – now we can keep harassing our employees” (although there are reports that Weinstein’s company actually incorporated that concept into his employment agreement).  Most employers use the finality of a settlement to move past a particular situation and move on to the business of correcting whatever issues might have led to that particular claim. As such, nondisclosure agreements can actually help an employer prevent future problems by allowing them to invest their resources into making sure the problem does not recur.

The Truth Lies Behind the Scenes

And therein lies the truth of the Harvey Weinstein matter. Settling cases in the hope of silencing victims is not a viable human resources strategy because, among many other reasons, it simply does not work.  It may get you past an immediate hurdle but there surely will be more such obstacles down the road because predators do not stop all by themselves.  In the case of Harvey Weinstein, as well as for former Fox News personality Bill O’Reilly and O’Reilly’s former boss Roger Ailes, settling harassment claims without addressing the underlying causes just delayed the inevitable.  Harvey Weinstein settled eight harassment cases (that we know of), but he and his company’s board of directors are still facing the music today.

In short, it isn’t the nondisclosure agreement that perpetuates harassment and creates victims.  That happens when employers view the settlement as the end of the problem and fail to take effective steps to insure that there won’t be another claim in the near future…because there surely will be.

Finally, for those that may still think that the harm of silencing victims, even for a little while, outweighs the benefits of nondisclosure agreements, remember that even when the victim settles their claim with the employer privately, they can still file a charge with the Equal Employment Opportunity Commission (EEOC). The EEOC contends that they enforce “public rights” and that a private settlement is not sufficient to divest them of their statutory duty to address and correct illegal discrimination in the workplace.  In such cases, despite the private settlement, the EEOC can investigate the charge but if they issue a finding against the employer, the employee will not be awarded any monetary damages because the employee already waived rights to those damages when they settled.  In this fashion, future targets of harassment can be protected despite a claimant’s entry into a nondisclosure agreement as part of a private settlement.

Bottom Line

Harassers harass – it’s what they do, and they will continue to do it if allowed.

No matter how valuable a harassing employee may otherwise be to the company, that value will eventually be eclipsed by the lawsuits, bad press and other negative fallout that comes with failing to take effective action to prevent further harassment.  Nondisclosure agreements do not create future victims – they come from employers who fail to view settlements and nondisclosure agreements as calls to action instead of a basis for inaction.