Grassroots campaign wants to reform ‘dangerous’ non-disclosure agreements in Canada, abroad

Law360 Canada (August 9, 2022, 12:07 PM EDT) -- The use of non-disclosure agreements (NDAs) has exploded in recent years, moving far beyond their original intent of protecting trade secrets to cover allegations of sexual misconduct and other incidents of harassment in both the workplace and beyond. But a new international campaign, co-founded by a Canadian law professor, is setting out to reform how they are used.

The Can’t Buy My Silence campaign was started by Julie Macfarlane, a distinguished university professor (emerita) at the University of Windsor’s faculty of law, and Zelda Perkins, who once worked for disgraced film producer and convicted sex offender Harvey Weinstein. And both know of which they speak — Perkins breached an NDA she had signed in order to speak about what she saw while working with Weinstein, and Macfarlane persuaded the Anglican Church and their insurer to end the default practice of forcing NDAs on victims of clerical abuse, while also raising alarm bells about a colleague who was terminated following an investigation for harassment and other misconduct who was protected by an NDA, and later moved to another law school which knew nothing of his history.

Macfarlane said one of the major issues with non-disclosure agreements is they are permanent and have “morphed into this idea of confidentiality forever and ever,” and people who sign them rarely, if ever, understand the full implications of them.

“It is an exchange transaction where the victim is being told the only way their privacy will be maintained is if they reciprocate by maintaining the privacy of the other party. But that is not really how negotiations work — they involve trade-offs,” she said. “If the only way the victim believes they are going to be able to be protected is by protecting the other side, that is completely inappropriate and wrong for them because they are often in a less powerful position.”

Macfarlane also said NDAs are dangerous because of what she characterized as a “pass the trash” phenomenon, where people can leave a workplace after an allegation of misconduct has been made without something on their record because the NDA scrubs that record clean.

“There are many cases that we have documented at schools, churches and even between corporations too where a person moves into another workplace and repeats their behaviour,” she said. “So, the idea you send someone with a clean bill of health to a new workplace doesn’t just mean the victim is being silenced from talking about their situation, it also means a new workplace will take on someone who has already behaved in this way with no knowledge of the fact that it happened.”

Toronto-based employment lawyer Andrew Monkhouse of Monkhouse Law Employment Lawyers, said template NDAs are used in almost any circumstance where a person has left their job — and those templates go far beyond just confidentiality about settlement amounts.

“I get it that people would not want to disclose the amount of money that they have paid out, but it requires them to remain confidential about the underlying circumstances of the claim — and of course it can be difficult for people to be told that you can’t speak to anybody with no carve-outs for something like a therapist,” he said. “And it does potentially allow for workplaces who may not be good workplaces to hide that fact, and then not to have to deal with the repercussions by sweeping it under the rug by signing an NDA.”

And as a result of these circumstances the Can’t Buy My Silence campaign has set out to ban the misuse of NDAs, developing model legislation which sets up a series of conditions that an NDA must meet in order to be enforceable — it is specifically requested by a victim, they fully understand it and have access to independent legal advice, and no third party or public interest is going to be adversely affected by the NDA.

That last provision would be a very difficult thing to meet, said Macfarlane.

“I think to cover up neglect in a care home or tax evasion is clearly a matter of public interest,” she said. “And there is an additional clause which says the complainant can waive the NDA in the future — we are constantly being told this is for the benefit of the complainant, but if that is really true then it should be able to be waived.”

And the campaign has borne fruit, with Prince Edward Island passing a bill to limit NDA use late last year. Legislators have introduced similar bills in Manitoba and Nova Scotia, and a number of universities in the U.K. have signed a pledge to stop using NDAs for complaints about sexual harassment, bullying and other forms of misconduct.

For her part, Macfarlane said she has faced some pushback from the legal profession on her campaign, but noted lawyers don’t generally see their clients again after they have made a settlement agreement, and it tends to be six months or more when the penny drops about the impact of an NDA.

“So I’m not sure that lawyers until now have really been aware of the impact these agreements have on people. I have made presentations on this where lawyers they have come to me afterwards and said they had never thought about that,” she said. “It is a genuine rethinking of this, and I think what tends to happen in legal practice as in any profession is we start to do things as a matter of rote. And I think the other thing that the legal profession is just starting to face up to is the idea that if these NDAs are put into agreements where people are going to work in a different school or hospital it might be with no knowledge of what happened before, and that is a really dangerous thing to happen.”

More information about the Can’t Buy My Silence campaign can be found here.

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