4 minute read
Management Counsel
MANAGEMENT COUNSEL: LAW PRACTICE 101 By: Allison S. Jackson
Egerton McAfee
DON’T SAY A WORD? NONDISCLOSURE AGREEMENTS IN THE #METOO WORKPLACE
On October 5, 2017, the New York Times published a work of investigative journalism about Harvey Weinstein, one of Hollywood’s most influential producers whose decades of sexual predation were chronicled by Pulitzer Prize-winning authors Jodi Kantor and Megan Twohey.1 The bombshell exposé revealed how, over the span of thirty years, Mr. Weinstein systematically paid off his sexual harassment accusers and shone light on the web of complicity that continuously enabled his wrongful conduct.2
Ten days after the story broke, actress Alyssa Milano posted her now-famous tweet, stating: “If you’ve been sexually harassed or assaulted, write ‘me too’ as a reply to this tweet.”3 Ms. Milano’s tweet was in reference to the Me Too campaign, which was founded by Tarana Burke, a civil rights activist, over a decade earlier to help women of color who were victims of sexual harassment or assault.4 Within weeks of Ms. Milano’s tweet, the hashtag #MeToo was used millions of times in eighty-five different countries and, thereafter, launched an entire social movement with which we’re probably all familiar.5
The #MeToo movement revealed the success with which nondisclosure agreements have been used to silence whistleblowers and sweep incidents of sexual harassment and assault under the proverbial rug. Notably, Mr. Weinstein entered into numerous settlements including nondisclosure agreements with women who had accused him of sexual harassment and assault.6 The notoriously restrictive agreements were a key ingredient in the recipe that enabled Mr. Weinstein and the Weinstein Company to keep these allegations under wraps for so many years.7
In the wake of the public outrage over this scandal (and others which are too numerous to mention in this brief article), the #MeToo movement spurred government and institutions to examine their own practices and propose or mandate reform. In Tennessee, our Legislature enacted a statute that limits sexual harassment nondisclosure agreements in the context of the employment relationship.8 According to Tennessee Code Annotated section 50-1-108, employers are prohibited from requiring a current or prospective employee to execute or renew a nondisclosure agreement regarding sexual harassment in the workplace as a condition of employment.9 The law applies to agreements executed or renewed after May 15, 2018.10 Any current or prospective employee who signs such an agreement in violation of the statute may have a cause of action against the employer for retaliatory discharge pursuant to Tennessee Code Annotated section 50-1-304.11
Relatedly, the federal government disincentivized confidential sexual harassment settlements. Section 13307 of the Tax Cuts & Jobs Act of 2017 provides that no deduction is allowed for settlements subject to nondisclosure agreements which are paid in connection with sexual harassment or abuse.12 The provision applies to amounts paid or incurred after December 22, 2017, and effectively requires employers to choose between nondisclosure and deductibility.13 Thus, Tennessee employers may opt to omit nondisclosure agreements from such settlements to preserve their federal tax deduction. Moreover, President Biden recently signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which amends the Federal Arbitration Act to allow employees subject to pre-dispute mandatory arbitration agreements to pursue their claims related to sexual harassment or assault in court, giving workers a choice of how to pursue their cases after sexual harassment or assault has occurred.14
Finally, the ABA House of Delegates passed a series of resolutions urging a variety of changes by employers in the legal profession. Resolution 300 urges legal employers not to require mandatory arbitration of sexual harassment claims, and Resolution 107B requests that legal employers not require mandatory arbitration of unlawful discrimination, harassment, or retaliation claims “based upon race, sex, religion, national origin, ethnicity, disability, age, sexual orientation, gender identity or expression, marital status, genetic information or status as a victim of domestic or sexual violence.”15 These reforms only scratch the surface of the multitude of changes that have occurred in connection with the #MeToo movement.
In many instances, the use of nondisclosure agreements is largely unproblematic. Certainly, they provide necessary protections for trade secrets and other sensitive proprietary and confidential information. But, in the context of sexual harassment and assault, such agreements undermine the significant public interest in knowing about and preventing workplace sexual harassment and assault. Employers must now assess the risk associated with allegations of sexual harassment and assault not only from potential lawsuits, which employers likely used to be comfortable managing, but also from a variety of unpredictable, external sources. Employers ought to pay attention to the legal landscape and public opinion concerning the longstanding problem of sexual harassment in the workplace.
Preventing harassment will avoid both potential liability and scandal, and an ounce of prevention is worth a pound of cure. Employers should also review any nondisclosure agreements in effect in the workplace, along with policies or procedures concerning sexual harassment.
1 Jodi Kantor & Megan Twohey, Harvey Weinstein Paid Off Sexual Harassment Accusers for Decades, N.Y. Times, (Oct. 5, 2017), https://www.nytimes. com/2017/10/05/us/harvey-weinstein-harassment-allegations.html. 2 Id. 3 Alyssa Milano (@Alyssa_Milanao), TWITTER (Oct. 15, 2017, 1:21 p.m.), https:// twitter.com/alyssa_milano/status/919659438700670976?lang=en [http:// web.archive.org/web/20210326212124/https://twitter.com/alyssa_milano/ status/919659438700670976?lang=en]. 4 See Tarana Burke, #MeToo Was Started for black and brown women and girls. They’re still being ignored., WASH. POST (Nov. 9, 2017), https://www. washingtonpost.com/news/post-nation/wp/2017/11/09/the-waitress-who-worksin-the-diner-needs-to-know-that-the-issue-of-sexual-harassment-is-about-her-
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