Employment Law Attorneys
The Long Overdue Death Of Non-Disclosure Agreements: Uncovering The Hidden Truth Of Employment Settlements…

The Long Overdue Death Of Non-Disclosure Agreements: Uncovering The Hidden Truth Of Employment Settlements…

By Chris Avcollie,

In an often-quoted line from the hit TV series Dexter, actor Michael C. Hall, who plays the title character said: “There are no secrets in life; just hidden truths that lie beneath the surface.” For those of us involved in the resolution of employment claims on behalf of employees, this quote has special meaning. Beneath the surface of most employment settlement agreements lie the undisclosed facts that led to the conflict and which often result in the messy end of an employment relationship. Recently proposed legislation in California seeks to ensure that those “hidden truths” do not remain hidden.

California Proposes New Law – Silence No More Act (SNM Act)

A new law proposed in California this week called the Silenced No More Act (SNM Act) is intended to prevent the enforcement of non-disclosure provisions in a wide variety of employment settlement agreements. The legislation, proposed by California State Senator Connie M. Leyva, will expand upon the 2018 STAND Act (Stand Together Against Non Disclosure) and will protect plaintiffs in cases of employment discrimination and harassment of all kinds who choose to speak out publicly about their experiences. Under the current provisions of the STAND Act, only plaintiffs in cases of gender discrimination or sexual harassment may avoid non-disclosure provisions. The new law will expand the STAND Act to prevent the use of non-disclosure provisions in employee severance agreements. Under the SNM Act, targets of discrimination based on race, national origin, religion, or gender identity will also now be free to ignore the contractual gag orders companies negotiate into their settlement agreements.

This legislation has been supported by employee rights groups in California including the California Employment Lawyer’s Association and the Equal Rights Advocates.  The new laws are seen as an end to the days when employer misconduct can be hidden from public view. Workers who have been targeted with harassment and discrimination will be free to speak their truth publicly. The perpetrators of this type of misconduct can no longer hide behind the veil of secrecy provided by their company. Non-disclosure and non-disparagement agreements will no longer be used to silence employees.  The hope is that the public disclosure of the details of these abusive work environments will prevent perpetrators from targeting other workers in the future.

STAND and SNM Could Influence Other States to Pass Similar Laws

Although STAND and SNM (if it is enacted) are or would be exclusively California laws, these statutes could ultimately have a broad national impact. Other states often follow California’s lead in employment matters. Further, the fact that so many large technology companies are headquartered in California gives these laws an outsized influence on the national conversation about non-disclosure agreements. In the wake of the STAND Act, a number of states have enacted some limitations on non-disclosure enforcement including Washington, New York, New Jersey, Vermont and Tennessee. Many more states are likely to see some version of this legislation in the future.

More Cow Bell – More Corporate Disclosure and Shaming = More Equality in the Workplace

As am employment attorney, I was very curious about how this new legislation might impact the ability of plaintiff’s lawyers to negotiate settlements for clients in employment discrimination cases. Often the best leverage plaintiffs have in the early stages of an employment case is the prospect of public disclosure of misconduct on the part of a company employee or manager. The reason many companies offer settlements to claimants is to avoid embarrassing public disclosures of uncomfortable truths about their corporate culture or work environment. Companies also have an interest in keeping settlements secret to avoid what they see as “encouraging” other claimants looking to “cash in” on potential claims. In other words, the concern is that the non-disclosure and non-disparagement provisions outlawed by the STAND Act and the SNM Act are the best tools to obtain fair settlements for employees who have been targeted with harassment or discrimination.

The STAND Caveat

Further examination of the proposed statute reveals that its scope is more limited than I had anticipated. These statutes are actually structured to encourage and not to discourage early settlement of discrimination cases. The STAND Act allows for use and enforcement of NDAs (non-disclosure agreements) in cases where there has not yet been any court or agency filings. So during the initial stage of the claim, when a demand letter has been issued but where claims have not yet been filed with state or federal human rights agencies (such as the Equal Employment Opportunities Commission or “EEOC” in federal discrimination cases or the Connecticut Commission on Human Rights and Opportunities or “CHRO” in Connecticut state discrimination cases) and no lawsuit had been filed, the companies may include NDAs in settlement agreements and they are enforceable.

This exception to the ban on NDAs is highly significant. Far from discouraging early settlements of discrimination claims, this feature of the proposed law offers employers a powerful incentive to settle employment discrimination and harassment claims early. If an early settlement is not reached then the agency filings will occur and the employer will lose the right to demand an NDA as part of the settlement agreement. In order to keep employee misconduct secret, employers will have to settle employment discrimination cases early and often. While some cases can be kept secret by early settlement negotiations, targets of discrimination who want to shed light on their experience can ensure their ability to speak out by filing their claims with state and federal agencies.

What Opponents/Management/Defense Attorneys Say About Anti-NDA Legislation

Opponents of the anti-NDA legislation contend that restricting NDAs takes away a survivor’s choice to keep their case private and provides a strong incentive for employers to refuse settlement options and to defend themselves against a publicly disclosed allegation. According to Attorney Jill Basinger, an entertainment litigation partner and Michael L. Smith an associate at Glaser Weil in Los Angeles, “This harms survivors of sexual harassment and assault by removing their choice and forcing them to endure the hardship and uncertainty of a public trial as the only means of vindicating their claims.”[1] Once an agency filing occurs or a lawsuit is commenced, the NDAs become unenforceable. It seems as if these laws would remove a strong incentive for defendant employers to settle claims.

It appears, however, as if the STAND Act has resulted in an increase in pre-filing mediations in employment cases in California.[2] According to Mariko Yoshihara, the Legislative Counsel and Policy Director for the California Employment Lawyer’s Association, the predictions and fears over the STAND Act impairing the ability to settle have not borne out. According to Attorney Yoshihara, attorneys involved in this type of litigation have informally reported that the legislation has not lowered settlement amounts or impaired the settlement process. Additionally, according to Yoshihara, it has made it easier to advocate for employee rights from a public policy perspective because the targets of harassment and discrimination can make their stories public. While dispositive data on this point is not yet available, it seems as if the legislation is working in California.

Further, fears surrounding the forced public disclosure of the identity of the claimant are unfounded. Under the STAND Act there are specific provisions which protect the identity of the complaining employee in the context of a lawsuit. The STAND Act includes a specific provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, including documents and pleadings filed in court, at the request of the claimant. California Code of Civil Procedure 1001(c). Thus, the anti-NDA legislation does not force the disclosure of a claimant’s identity.

While many employer advocacy groups including various chambers of commerce and industry and trade associations have opposed legislation such as STAND and SNM, similar legislation should be considered by all state legislatures that have not already enacted similar laws.  When it comes to use of NDAs in employment discrimination and sexual harassment cases there is an unfair imbalance of power between the bargaining parties. The employers who are often defending the harasser or denying that the harassment occurred have an overwhelming advantage over the complaining employee in terms of investigative, legal, personnel, and financial resources. Employers are frequently holding all of the cards in a settlement negotiation. Legislation such as STAND and SNM will help to level the playing field at least with respect to NDAs.

More Power to the People/Employees – Shift In the Balance of Power

Placing the power over which aspects of the case can or will be made public in the hands of the targets of harassment and discrimination will help balance the power in the arena of employment settlement agreements. As evidenced by the initial success of the STAND Act, these laws can be an important tool in ending the culture of silence that has permitted harassing and discriminatory behavior to continue in the workplace for so long. In a recent opinion piece, the feminist writer and critic Marcie Bianco said: “If the societal change necessary for dignity and justice is to occur, we must move from awareness to accountability.”[3] This legislation should help bridge the gap between awareness and accountability. We need to see a whole lot more of those “hidden truths” lying beneath the surface of the American workplace.

If you would like more information about this article, please contact Carey & Associates, P.C. at info@capclaw.com or call 203-255-4150.

Christopher S. Avcollie

[1] Basinger, Jill and Smith, Michael L.; “How California’s NDA Restrictions Cause More Harm Than Good for Survivors” (Guest Column); Hollywood Reporter;  https://www.hollywoodreporter.com/news/how-californias-nda-restrictions-cause-more-harm-good-survivors-guest-column-1280922

[2] LeHocky, Mark, “Shining a Needed Light on Harassment and Discrimination Claims: The Collective Benefits from California’s Recent Secret Settlement Restrictions”, Contra Costa County Bar Association, March 2020;   https://www.cccba.org/article/shining-a-needed-light-on-harassment-and-discrimination-claims/

[3] Bianco, Marcie, “Britney fans angry at Justin Timberlake have a point.” CNN Opinion, February 10, 2021.

Podcast: Supreme Court Says Sex Discrimination Includes Homosexuality and Transgender Status

Podcast: Supreme Court Says Sex Discrimination Includes Homosexuality and Transgender Status

This episode of the Employee Survival Guide discusses a landmark U.S. Supreme Court decision granting employment protection to transgender and homosexual employees.  Your host Attorney Mark Carey will run you through the case analysis and the impact on your employment rights and what you can do to protect yourself from employment discrimination based on your sexual orientation.

For more information about this topic, please contact our employment attorneys at Carey & Associates, PC at 203-255-4150 or email to info@capclaw.com. Thank you for listening.

Podcast: Supreme Court Says Sex Discrimination Includes Homosexuality and Transgender Status

Supreme Court Says Sex Discrimination Includes Homosexuality and Transgender Status

By Mark Carey and Fran Slusarz,

The Supreme Court just issued a ground-breaking Bostock decision making it unlawful for employers to discriminate on the basis of a person’s sexuality or gender identity. About half the states already had laws protecting LGBTQ employees, but this decision extends employment rights to all LGBTQ folks in America and opens the federal courts to them. In this quarantine Pride Month, devoid of parades and parties, the Bostock decision is certainly something to celebrate!

On the day the Bostock case was being argued (October 8, 2019), we predicted the now historic outcome in an article stating, “…the Court will hold that sexual orientation discrimination and discrimination based on transgender status constitute sex discrimination under Title VII of the 1964 Civil Rights Act because adverse employment decision discriminating against the LGBTQ community are being made ‘because of sex’ of the employee.” Honestly, there was only one direction the Bostock holding could go, granting protected status under Title VII.

A Monumental and Unpredicted Decision for LGBTQ Employees

The decision is monumental and unpredictable for several reasons. First, it provides equal treatment to LGBTQ employees in their employment and provides tools to fight against employment discrimination. Sexual Orientation carries as equal a significance as race, national origin and religion, under Title VII.  Second, the Supreme Court’s decision demonstrates what we have been complaining about for a long time, employment law is NOT political and should not be politicized. Employment law is bi-partisan and protects everyone.  Here, conservative justices (Gorsuch, Roberts) joined with the Court’s liberal wing (Bader-Ginsburg, Breyer, Sotomayor, and Kagan) to expand Title VII protections to a whole new class of employees.  We are all equal under Title VII, contrary to current popular media depiction that as a country we are inherently unequal and divided during this election season.

Three Cases, Almost Identical Facts, and Different Outcomes

The Bostock decision actually involves three separate cases with almost identical facts and different outcomes. Frankly, advocates could not have dreamed up the perfect test cases for securing LGBTQ employment rights if they tried. They each involve long-term employees who were fired from their jobs after their employers learned they were homosexual or transgender, and for no other reason. They involve both public and private employers.

Gerald Bostock worked for Clayton County, Georgia, as a child welfare advocate for more than a decade. The county won national awards for the work he did leading the department. When “influential members of the community” made disparaging remarks about Mr. Bostock’s participation in a gay softball league, he was fired for conduct “unbecoming” a county employee. The Eleventh Circuit dismissed his case, holding that Title VII to the Civil Rights Act does not prohibit employers from firing employees for being gay.

Donald Zarda was a skydiving instructor with Altitude Express in New York. After several years with the company, Mr. Zarda mentioned to a female student that he was “100% gay” to allay any discomfort she may have felt about their tandem jump – she was going to be extremely close to Mr. Zarda, strapped to the front of his body. Days later, he was fired. The Second Circuit held that Title VII prohibited employers from firing an employee for being gay.  Mr. Zarda died before his case reached the Supreme Court and his estate continued his legal battle.

Aimee Stephens worked for R.G. & G. R. Harris Funeral Homes in Garden City, Michigan for six years. During her tenure, she presented as male. When she informed her employer that she planned to “live and work full-time as a woman” upon her return from an upcoming vacation, the funeral home fired her saying, “this is not going to work out.” The Sixth Circuit’s decision was consistent with Second Circuit: Title VII prohibited employers from firing an employee for being transgender. Ms. Stephens died last month, yet her estate carried her fight to fruition.

The New Rule Banning Sexual Orientation Discrimination

Justice Gorsuch, who wrote the opinion for the 6-3 decision, wrote:

“An employer violates Title VII when it intentionally fires an individual employee based in part on sex. It doesn’t matter if other factors beside the plaintiff’s sex contributed to  the decision. And it doesn’t matter if the employer treated women as a group the same when compared to men as a group. If the employer intentionally relies in part on an individual employee’s sex when deciding to discharge the employee—put differently, if changing the employee’s sex would have yielded a different choice by the employer-a statutory violation has occurred. Title VII’s message is ‘simple but momentous’: An individual employee’s sex is ‘not relevant to the selection, evaluation, or compensation of             employees.’…

An individual’s homosexuality or transgender status is not relevant to employment decisions. That’s because it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.

At bottom, these cases involve no more than the straight-forward application of legal   terms with plain and settled meanings. For an employer to discriminate against employees for being homosexual or transgender, the employer must intentionally discriminate against individual men and women in part because of sex. That has always been prohibited by Title VII’s plain terms—and that ‘should be the end of the analysis.’”

How Can You Protect Yourself After Bostock?

If you are a LBGTQ employee and believe you are experiencing unfair treatment at work, we have the following strategies your employer may not want you to know about.  First, very quietly write down your factual narrative in chronological order on a computer you do not use or access for work.  Writing out your story is part of the investigative process that lawyers use to determine liability and how we advise clients. If you are getting the sense you are being set up for a performance improvement plan (PIP) or termination, your employer and their employment attorneys are already examining and trying to control your factual narrative, but they will never tell you that.   Second, quietly gather all offending and supportive emails, text messages, slack message etc. and preserve them.  The content of these documents should appear in your factual narrative in some form. Third, do not tell your supervisor or HR that you have potential claims until you speak to an employment attorney in our office.  Your supervisor and HR personnel do not represent you and work only against you on behalf of the employer.  They will always deny this fact. Third, you need to decide if you are going to remain employed or seek a severance package from the employer.  We have an obligation to keep you employed for as long as possible for your income purposes. More importantly, you may be able to gather corroborating or direct evidence of discrimination by remaining employed; your employer will not predict you are secretly investigating them and trying to set them up. Yes, you can do that.  Fourth, you never want to quit your job as you cannot collect unemployment benefits and it is more difficult to demonstrate a constructive discharge (i.e. anyone would leave on similar circumstances and file a charge).  Fifth, after we put your case together, we will then place the employer on notice that it is discriminating against you because of your sexual orientation and attempt to negotiate your exit package.  Sixth, avoid litigation at all costs, due to the expense and time involved; yes lawyers do give that sort of advice and we do it every day.

We have had many sexual orientation claims over the past twenty-four years, including several complicated transgender cases. We are more than familiar with all of the employer’s strategies and we can quickly assess the liability in your case.  For more information please contact Carey & Associates, P.C. at 203-255-4150 or send an email to info@capclaw.com.

Podcast: Supreme Court Says Sex Discrimination Includes Homosexuality and Transgender Status

History in the Making Today: Sexual Orientation Discrimination is Illegal

By Mark Carey

Sexual Orientation discrimination is being argued today before the United States Supreme Court in the combined cases of Bostock v. Clayton County George and Altitude Express, Inc. v. Zarda. The Court is also holding argument in a similar transgender discrimination case of Harris Funeral Homes, Inc. v. EEOC. The trio of cases are as important as the same sex marriage equality issue ratified by the Court in Obergefell v. Hodges.  These cases are history in the making and I predict the Court will hold that sexual orientation discrimination and discrimination based on transgender status constitute sex discrimination under Title VII of the 1964 Civil Rights Act because adverse employment decisions discriminating against the LGBTQ community are being made “because of sex” of the employee.

The controversy around the cases has more to do with “perceived politics” infecting the bench than whether sexual orientation discrimination falls within current federal law “because of sex”, which it does.  Although the Court’s majority now leans to the conservative side, the Court cannot ignore prior precedent written by Justice Scalia in Oncale v. Sundowner Offshore Services.  In Oncale, the Court held,

“Courts and juries have found the inference of discrimination easy to draw in most male-female sexual harassment situations, because the challenged conduct typically involves explicit or implicit proposals of sexual activity; it is reasonable to assume those proposals would not have been made to someone of the same sex. The same chain of inference would be available to a plaintiff alleging same-sex harassment, if there were credible evidence that the harasser was homosexual. But harassing conduct need not be motivated by sexual desire to support an inference of discrimination on the basis of sex. A trier of fact might reasonably find such discrimination, for example, if a female victim is harassed in such sex-specific and derogatory terms by another woman as to make it clear that the harasser is motivated by general hostility to the presence of women in the workplace. A same-sex harassment plaintiff may also, of course, offer direct com-parative evidence about how the alleged harasser treated members of both sexes in a mixed-sex workplace. Whatever evidentiary route the plaintiff chooses to follow, he or she must always prove that the conduct at issue was not merely tinged with offensive           sexual connotations, but actually constituted ‘discrimina[tion] … because of … sex.’”

The Court does record oral arguments and posts them to the Court’s website at the end of each argument week.  I encourage you to listen to the case, especially because the Trump Administration is arguing that Title VII does not cover sexual orientation discrimination, even though the U.S. EEOC has ruled that it does fall within the statute.

If you would like more information about sexual orientation discrimination and transgender discrimination, please contact employment attorney Mark Carey at 203-255-4150 or info@capclaw.com.

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