Sen. Elizabeth Warren has brought national attention to nondisclosure agreements this week, criticizing billionaire businessman and former New York City mayor Mike Bloomberg for his alleged history of inappropriate behavior toward women and using NDAs to keep employees from speaking out.
Bloomberg initially declined to release employees from these contracts, but has since changed course. On Friday, he offered to release women from three non-disclosure agreements with his media company if they wanted, and said his firm will no longer offer NDAs "to resolve claims of sexual harassment or misconduct going forward."
This follows Warren hammering the topic again at a town hall hosted by CNN on Thursday, saying to make things "easy," she had created a document Bloomberg could sign to release employees who no longer want to be bound by these confidentiality agreements.
"All that Mayor Bloomberg has to do is sign it. I'll text it," she said.
NDAs have come under scrutiny in recent years, as the #MeToo movement spotlighted their use in sexual harassment disputes. When reached for comment on Thursday, Bloomberg's campaign chair touted the former mayor's history of hiring and promoting women. She said Bloomberg has "never tolerated any kind of discrimination or harassment."
Many workers may be wondering just how common NDAs are, how they actually work, and what their rights are. We break it down below.
What are NDAs?
Currently, more than one-third of the U.S. workforce has been required by their employer to sign a nondisclosure agreement, reports the Harvard Business Review. These agreements, according to National Women's Law Center legal fellow Ramya Sekaran, "prevent workers from disclosing specific types of information about their employer when they're used in a workplace context."
"Traditionally, companies use these nondisclosure agreements to protect trade secrets," she tells CNBC Make It. "But, since the 1980s we've seen that companies have expanded these nondisclosure agreements to prohibit workers from speaking up about a range of workplace conditions, which include harassment, discrimination and other types of violations of worker's rights."
At some companies, employees are required to sign an NDA the minute they are hired in order to keep information about their employer confidential. Employees may also be asked to sign an NDA when they are terminated in exchange for severance pay, or in exchange for money after a sexual harassment or discrimination case has been settled.
"Historically, when an employee brings some sort of complaint of workplace discrimination or sexual harassment action against the employer, there is a payment of a sum of money," explains Davida Perry, co-founder and managing partner of Schwartz Perry & Heller LLP in New York City. "[This means] the case either got settled voluntarily and a payment is made. Or, if the person filed something in court and it goes to trial and the employee wins, then a payment is made."
In most cases, Perry says, an employer will only settle a case if an employee agrees to the confidential terms outlined in the NDA.
What should you know before signing one?
Perry, who has worked as an employment lawyer for more than 30 years, emphasizes that anyone who is asked to sign an NDA should know that they have the right to negotiate the terms of their agreement. Additionally, she says, any employee who is asked to sign an NDA upon being hired should be mindful of the type of work environment they may be walking into.
"I don't want to throw everybody in one box," she says, "but I would think that if a company is very concerned about its employees talking about what goes on in the workplace then there's [probably] something going on in that workplace that they're worried about getting out."
Sekaran adds that in addition to reading the details of your NDA carefully, you should also research whether or not your state has a law that protects your rights under these agreements.
"We've seen 13 states that have taken steps to either ban the use of nondisclosure agreements as a condition of employment, as well as limit the use of NDAs in settlement separation or severance agreements," she explains.
Since the start of the #MeToo movement in 2017, states like California, New York, Maryland, Arizona and many more have made adjustments to how employers can use nondisclosure agreements as it relates to employment, according to a 2019 report released by the National Women's Law Center. In New York, for example, Sekaran explains that employers are no longer able to include an NDA in settlement agreements involving discrimination, unless the employee prefers to have one. In the event that the employee does, they then have 21 days to consider the terms of the NDA.
"It's important that in the context of settlement separation and severance agreements that NDAs are not banned completely and that victims of harassment or discrimination still have the option of requesting an NDA if that's what they truly want," says Sekaran, while adding that there should be guidelines "built into the law to ensure that the power imbalance between workers and their employer is addressed."
How do you get out of an NDA?
For some survivors of sexual assault and discrimination, NDAs can be favorable because it allows them to keep the details of their case private. But for other survivors, Sekaran says, NDAs are viewed as a tool to "silence individuals who have experienced harassment while empowering employers to hide ongoing [issues]."
If you're caught in a nondisclosure agreement that you'd like to get out of, Perry says you'd need to seek a lawyer who can help you take legal action against your employer. "If you file something in court, they're not going to be able to say you violated the NDA because you have a privilege to be able to assert your claims in court," she says.
However, if you've already settled on a monetary sum in exchange for an NDA, then Perry says breaking the terms of your contract could lead to your employer taking legal action against you. However, as Warren suggested, Perry says an employer can agree to waive the nondisclosure and let you speak.
To help sexual harassment victims who'd like to share their stories, journalist Gretchen Carlson and former Fox News contributor Julie Roginsky started Lift Our Voices in December 2019. The organization focuses on preventing companies from using NDAs in order to gloss over incidents of sexual harassment and discrimination.
"I knew my own personal experience, and it was an incredibly lonely, isolated experience," Carlson, who received a reported $20 million settlement in 2016 following her sexual harassment claims against Fox News chief Roger Ailes, tells The Hollywood Reporter. "I had no idea how pervasive this epidemic [of sexual harassment] was. I had no idea how it had been kept under wraps. Had I known what I know now, when I filed my case, I would have fought harder not to have an NDA."
So far, Carlson says via Twitter, that Warren, former South Bend, Indiana Mayor Pete Buttigieg and former Vice President Joe Biden have signed onto Lift Our Voices' mission to end NDAs. Meanwhile, Sen. Bernie Sanders, Sen. Amy Klobuchar, and Bloomberg have yet to sign on.
Editor's note: This post has been updated to reflect the latest developments.
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