Nondisclosure Agreements: Sexual Harassment and the Contracts of Silence
By Annie Hill | November 14, 2017
On October 5, 2017, the New York Times revealed that Hollywood producer, Harvey Weinstein, paid eight settlements in response to allegations of sexual harassment, dating back to 1990. The article detailed a behavioral pattern in which Weinstein lured women into meeting with him on the pretense of work and then appeared in various states of undress, demanded a massage, touched women without consent, or asked them to watch him shower. Weinstein’s conduct was condemned, but contextual questions soon emerged: who helped him create opportunities to harass and assault women, and who refused to see the harassment and hear victims’ complaints? Many people privately knew about Weinstein’s behavior. His sexual violence did not become public, however, due to the use of nondisclosure agreements (NDAs) in settlements with victims. Purportedly part of the solution to harassment (i.e., legal settlement), NDAs can facilitate harassment by keeping sexual violence secret and victims silent.
The Weinstein scandal exposes not only his violence against women, but also how NDAs can be used pre-emptively and post-harassment to silence victims and threaten them with sanction for contractual breaches.
Pre-emptive NDAs protect information before it is shared or known, and are often in place to protect trade secrets or the reputations of companies and individuals. For example, companies obtain NDAs before providing details about new products to ensure the information is not stolen or given to competitors. Companies also use confidentiality agreements to stop employees from saying anything damaging to an employer’s reputation. Weinstein Company employees signed contracts prohibiting them from making statements that could harm its reputation or the reputation of employees, including executives. This type of NDA contracts employees’ speech as a condition of employment—a remarkably coercive practice that is conducive to hostile workplaces because harassers know their coworkers are particularly vulnerable and unable to speak out. A third use of NDAs occurs after harassment when a harasser or employer enters into a legal settlement with the victim(s) that forbids speaking about the case as a condition of settlement.
NDAs are designed to control and protect information, but the live question is what kinds of information should fall under their protection.
In the context of sexual harassment, NDAs are pernicious contracts. People who engage in harassment try to control victims and information, and employers align their interests with harassers when they use NDAs for reputational damage control. NDAs do not offer equal protection to both parties because they disable victims from talking about experiences that impacted their professional lives and enable harassers to hide information pertinent to their professional reputations. Contrary to NDAs that permit parties to do business together or protect proprietary rights, NDAs that hide harassment withhold crucial information from the profession and the public.
Employing a harasser is both an institutional liability and a public hazard. An article in The Guardian on sexual harassment in academia notes how NDAs allow harassers to change employers while hiding a history of professional misconduct. Once employed at a new institution, it can take multiple years and victims before a harasser’s behavior is, again, reported and addressed. If new victims obtain settlement, NDAs can, again, be utilized to protect the reputation of the employer and, by extension, the harasser. A cycle of victims speaking out and then being silenced via settlement works with, not against, the cycle of sexual violence.
US federal law prohibits retaliation for reporting discrimination, yet NDAs offer legal routes to discourage victims from reporting harassment and sharing information with others.
According to a 2002 decision by the National Labor Relations Board, employees have a right to discuss sexual harassment complaints among themselves and to engage in concerted activity, such as union organizing, to protect others. The National Labor Relations Act of 1935 defines interference with employees’ right to concerted activity as an unfair labor practice. Today, a long tradition of women’s “whisper networks,” warning others about sexual harassers, is being transformed into public speech through social media platforms. While the law may be wielded against victims who speak publicly, they must because the law often fails to prevent and correct sexual harassment. Warning each other is still women’s work.
At this writing, more than 80 women have publicly stated that Weinstein harassed, assaulted, or raped them. The eight reported settlements only hint at the scale of this one man’s four decades of sexual predation. Serial harassers are invested in silencing victims, especially those who fight all the way to settlement and pose a real risk of exposure. The New York Times called on Weinstein to release his accusers from NDAs, and some women breached them to come forward. It is now essential to question the logic and law that forces victims to fight to speak and request “release” from contracts controlling their communication. That victims can be bound by NDAs compounds the abuses of power they have already experienced. To prevent further abuse, power must be taken from abusers.
The recent scandals involving Harvey Weinstein, Roger Ailes, Bill Cosby, and Bill O’Reilly, as well as harassment scandals within academia, show that women at work and in search of career opportunities continue to experience discrimination and disenfranchisement.
We should ask why we expect victims to speak out when the pressure to stay silent is not only culturally conditioned, but can be contractually enforced.
Due to the difficulties of reaching settlement and bringing harassment cases to court, there are several arguments that NDAs help victims. First, victims of harassment may fear that knowledge of a settlement will harm future job prospects by marking them as litigious or troublemakers. Second, employers and harassers might be less inclined to negotiate or pay a settlement if they cannot obtain an NDA, a situation that could diminish victims’ bargaining power in recovering damages. Third, sexual harassment stigmatizes victims and having what a harasser did made public can be embarrassing and harmful to victims. These concerns are valid, yet they all speak to the skewed cultural context in which victims salvage careers and rebuild their lives. Stigma and professional repercussions reinforce rape logic, which I analyze elsewhere, by blaming and punishing victims for sexual violence committed against them.
NDAs are rarely in the victims’ interest because they shield the powerful and can be installed in perpetuity. Therefore, a concerted effort to resist NDAs is a crucial step in ending discrimination and unfair labor practices.
As the outpouring of harassment stories grows—including from female lawmakers in Congress—this watershed moment suggests that many victims want to speak and the public wants to know.
Secrecy is an ally of sexual violence. Victims speaking out is a necessary form of prevention because it exposes the pattern of abuse, warns others, and encourages people to come forward, including other victims and bystanders. Given the vast and varied costs of sexual violence to victims and employers, companies should not use NDAs in harassment settlements or in employee contracts to protect their reputations. Employers ought to incur reputational damage if they harbor harassers. Continuing to deploy NDAs allows sexual harassment to become a type of “trade secret” across professions, in academia as in Hollywood. In the wake of Weinstein, it is clear that contracting victims’ speech means sexual violence will never be settled.
Women have come a long way. Indeed, women have done so well that journalists have hailed “The End of Men” and celebrated “The Richer Sex.” Yet, a more in depth look at the persistent gender gap in wages tells a different story. Yes, the wage gap overall between men and women’s wages has narrowed over the last half century. Since 1990, however, continued progress has come primarily from the decline in blue collar male wages. For college graduates as a whole, the gendered wage gap increased since 1990, with particularly large increases, even controlling for factors such as occupation and education, above the 90th percentile. This growing gender gap demonstrates not just that the glass ceiling persists in the most lucrative parts of the economy but that women have lost power in society more generally. A small group of white and occasionally Asian men has disproportionately benefited to the exclusion of everyone else. The question is why and what we can do about it?
The conventional answer – that increased competition places greater emphasis on the willingness to work long hours that conflict with family obligations – rings hollow as a complete explanation, though it is certainly part of the story. Instead, a full discussion requires consideration of the nature of competition itself. The areas of the economy where pay has increased most dramatically in the last quarter century – the upper management ranks, finance, and the top of the professions – have also seen increased competition among those who aspire to those ranks. Indeed, the competition has become sufficiently artificial and intense that some have labeled it “the tournament.”
And these winner-take-all competitions, where yearly pay depends heavily on annual bonuses, have deeply pernicious effects on women and people of color.
First, the competition itself often takes the form of longer hours, enhancing the pay offs to those who can put the job ahead of everything else in their lives. In 1960, white and blue collar men worked about the same number of hours; today, the top earning American men and women work dramatically longer hours than blue collar workers – hours at least as long as those of top earners anywhere else in the world.
Second, the increasingly competitive nature changes the selection process. Law professor Larry Ribstein explained that:
These executives are hyper-motivated survivors of a highly competitive tournament . . . . At least some of the new breed appear to be Machiavellian, narcissistic, prevaricating, pathologically optimistic, free from self-doubt and moral distractions, willing to take great risk as the company moves up and to lie when things turn bad.
A growing management literature concludes that these highly competitive environments make it more likely that those who rise to the top in these tournaments will have the characteristics associated with narcissism, including optimism, the ability to inspire, the inclination to cut corners, and the willingness to run roughshod over others to achieve their objectives. Men are more likely than women to be narcissistic (and although some believe the gap is closing), and to be perceived as having the leadership qualities associated with narcissism. Moreover, corporate cultures that use rankings to justify large disparities in compensation tend to produce greater emphasis on self-interest, higher levels of distrust that undermine teamwork, greater homogeneity in the selection of corporate management, less managerial accountability, and more politicized decision-making. The result tends to create a “young boys’ club” that makes it harder for women and minorities.
Third, the selection for narcissistic leaders reinforces deeply gendered dynamics.
Even among narcissists, men and women are likely to differ in ways that affect the selection process for executive leadership. Both male and female narcissists like to be the center of attention. But researchers found that male narcissists were more likely than women to desire power and to be attracted to positions that promised money, status, and authority. Moreover, the single largest gender difference was the willingness of the male narcissists to demand greater rewards for themselves and to use greater status to exploit others. A study of tech firms indicated that the more narcissistic CEOs—rated in accordance with an employee evaluation of personality traits—received “more total direct compensation (salary, bonus, and stock options), have more money in their total shareholdings, and have larger discrepancies between their own (higher) compensation and the other members of their team;” in short, the qualities that also correlate with gender differences among narcissists also correlate with differences in male and female compensation.
Fourth, this selection process reinforces the classic “double bind” for women. Greater competition, particularly when tied to short term, reductionist measures, tends to increase the payoffs to the self-interested that can bend the rules and get away with it – and tournament-like environments have been associated with greater levels of fraud and misconduct. Yet, studies of financial advisors, where misconduct findings are rife and gender gaps are among the highest in the economy, show that women are less likely to engage in misconduct, more likely to be punished when they do, and less likely to be rehired, even though the losses their misconduct cause are lower than those of the men.
Taken together these processes produce a triple, not just a double, bind for women.
Greater competition makes it more likely that narcissists will thrive, and that such leaders will valorize further competition that enhances executive power and compensation. These tournament-like environments undermine trust and cooperation and increase distrust of outsiders. Women are less likely than to men to thrive in such environments, less likely to be seen as having the competitive juices necessary to do what it takes, and more likely to be cashiered if they try to compete on the same terms as the men. Women in turn accurately see such competitive environments as hostile ones, and therefore they become less likely to apply, increasing the male domination of such workplaces. Since the late nineties, the number of women on Wall Street and in venture capital firms has fallen and it should hardly come as a surprise.
Is there a role for public policy in addressing this toxic tournament environment that results in unequal pay, but also negative externalities for individual companies and the economy as a whole? In addition to a decrease in the gender pay gap, efforts to reduce tournament style pay schemes could also enhance the incentives for corporate responsibility and reduce fraud and corruption.
A large body of research suggests that linked transparency and accountability schemes hold promise.
In that vein, amendments to equal pay laws that explicitly address bonus pay and processes have potential, as do efforts to make corporate data about compensation levels and practices public. On the international front, Iceland’s newly adopted equal pay law requires proof of compliance, oversight of pay practices and consequences in the form of fines. The UK has also moved forward with a bold transparency policy, requiring most employers to collect data on pay gaps and publish it on their own and on government websites where it can be used to rank employers and provide critically valuable information to employees that may want to pursue their rights under traditional Equal Pay laws. In the U.S., President Obama and Governor Deval Patrick both used the power of their offices to create Equal Pay pledge processes that deploy “good press” and “added brand value” as levers for improved corporate practice. Federal, state (Minnesota) and local governments (Albuquerque) have also pioneered the use of government contracting as a tool to drive better corporate and business pay practices. These and other possible approaches must recognize and explicitly address the turn toward high stakes tournaments that reward narcissism to be successful.