The Campaign to End NDAs

Law professor Julie Macfarlane wants legislation to limit the use of nondisclosure agreements as an all-purpose muzzle

Nondisclosure agreements, by their nature, can be a tricky thing to track. Because they often contain terms that prohibit confirmation of their very existence, it’s hard to know just how many are out there or to get a firm handle on trends.

But Julie Macfarlane has a pretty good idea. This week, the University of Windsor law professor emerita is launching a campaign in Canada and the UK called Can’t Buy My Silence, advocating for legislation to limit the utility of NDAs as an all-purpose muzzle, especially in cases involving allegations of wrongdoing.

“We’re working in our campaign with a partner in the UK, who has been putting out a survey now for a couple of years to people who’ve been, in particular, bullied and harassed in their workplaces,” she says. “And that survey asks them anonymously to say whether or not they’ve signed a nondisclosure agreement.”

The clever twist is that in addition to “yes” or “no,” the survey gives participants the option of indicating that they can’t answer for legal reasons — a pretty clear sign that they are in fact party to an NDA.

“And based on that data, which is now approximately 600 respondents, we know that about one in three people who have reported an incident of harassment or intimidation or bullying at their workplace have been asked to sign an NDA,” she says.

But that could still be a low-ball estimate. “There are lawyers who would tell you that up to 95 percent of civil settlements now include some kind of nondisclosure agreement.”

On this week’s episode of CANADALAND, Macfarlane talks with host Jesse Brown about the growing uses and abuses of NDAs, why they can seem scarier than they actually are, and why she’s teaming up with Zelda Perkins, a former assistant to Harvey Weinstein, to try to bring a near-total end to the practice.

The following is edited from Macfarlane’s comments on the show:

If you go back to what nondisclosure agreements were originally designed to protect, it was in fact trade secrets. It was proprietary information. In the tech industry in the 1980s, there were a lot of very important innovators developing new programs, new software, new platforms, new coding for the tech companies. And if somebody got head-hunted by another company, it was perfectly reasonable that they didn’t want them to take those trade secrets with them.

But what has happened in the creep that we have seen since the 1980s is that now everybody’s bad experience at work has become a trade secret. So effectively what you’re saying to people coming into a workplace is “Nothing bad that happens to you while you work for us can ever be talked about to anyone indefinitely.” Because NDAs are indefinite, they’re not just for a limited period of time: they are forever. I talk to people who signed NDAs 15, 20 years ago, and they’re still living with a feeling of extreme paranoia. The smallest impact is that they no longer have relationships with any of the coworkers that they worked with at a particular workplace where they had a bad experience. But there are all kinds of other impacts as well, because they can’t talk to — or at least they perceive that they will be penalized if they talk to — family members or friends or even professional therapists.

Apart from anything else, it is established law that you cannot prevent somebody from reporting a crime to police, and when sexual harassment rises to the level of a crime, there’s nothing to prevent you speaking to them in any case. But nonetheless, because people perceive themselves to be constrained, they are constrained.

“At the moment, NDAs are silencing people because they don’t know better, because they’ve signed a piece of paper that was very legalistic and intimidating”

We’ve got two kinds of things in tension here, and that’s why I think it’s so important to have legislation that clarifies this.

First of all, we’ve got this idea that when people enter into a contract, they can agree to whatever they want to agree to. And that’s this idea of “freedom of contract.” It’s a sort of fundamental tenet of Western, open, democratic society that you can make an agreement about anything you want to make an agreement about, as long as — and this is very important — you actually understood what you were making an agreement about. And as long as you weren’t duressed into signing it. And as long as it’s not what sometimes described in the law textbooks as “unconscionable” — in other words, wildly exploitative and unfair.

Now, I believe that in fact, NDAs are frequently unenforceable for those reasons. The people that I speak to, uniformly, did not understand what it was they were signing. Uniformly, were pressured and duressed into it. It’s important to note here that a lot of these individuals did not have lawyers, because they couldn’t afford to have a lawyer. So they are facing the company or they’re facing the perpetrator or they’re facing the source of the wrongdoing without legal representation on their side. Even where they do have legal representation, their lawyers tend to be — as somebody put it to me just this morning — “trading them in for a settlement.” In other words, the idea is that as long as the lawyers can get a settlement — and goodness knows they put these clauses in every agreement, anyway, is how they think about it — they’ll get paid. And so the person I spoke to this morning described feeling that they were actually being traded in for a settlement, which I think is a very powerful way of putting it.

But on the other hand, we have the fact that there is a public interest to be protected here. I think that it’s clear that you cannot prevent somebody from bringing something to the attention of the authorities — for example, reporting to the police on the possibility of a crime. So that means that there’s always going to be this balance that gets struck. So we have a lot of confusion here.

And what’s working at the moment is NDAs are silencing people because they don’t know better, because they know they’ve signed a piece of paper that was very, you know, legalistic and intimidating, and it told them, “You can’t talk to anybody.”

“Very vulnerable people are being told, ‘You can’t do anything about this, just sign it.’ But it’s a bluff”

I am campaigning now, along with Zelda Perkins, for legislation that will ban nondisclosure agreements in these circumstances, so that people won’t even be faced with them, and which will say very clearly, “You cannot make an enforceable agreement if it’s something that’s going to harm other people, if it’s going to have consequences for the public interest.” So we need legislation from the top down that will make it clear that these agreements are not enforceable and they’re off the table.

I remember when I first started teaching contracts, Michael Jackson was making agreements with his then-accusers. This is going back 25 years ago now. Those contracts said that they would not report what was alleged to have happened to the police or to the authorities, and those agreements were struck down. So it is very clear and settled law that you cannot make and enforce an agreement for an illegal purpose.

But the way the legal system works isn’t really about what the courts might say, it’s about what people think and it’s about what people believe. And in this case, there is a very vulnerable and captive and often desperate group of people who really need that severance agreement and who are being told, “You can’t do anything about this, just sign it.” But it’s a bluff.

The other way in which I would draw attention to the fact that it’s a bluff is not only is it not enforceable in many cases, but in actual fact, it’s not something that the other side is going to go to the wall for, anyway, because the last thing they want is publicity, right? To enforce these agreements, they’d have to go to open court.

So tempting as it might be to say they’re already unenforceable, I think that we need clear legislation to make this absolutely unimpeachable.

I did consider, and Zelda and I did talk for a while about, a strategy that would be about going to individual businesses and institutions, and asking them to say, “We will not use these any longer.” Another strategy could be to take some of these really egregious, overreaching NDAs to the courts and have them strike them down as unenforceable. But that would mean that you would still have to keep doing that. You’d have to keep going to individual businesses, individual institutions, and saying, “Look, your code of practice says you won’t use NDAs, and you just asked for one again.” Or you’d have to go back to the courts and you’d have to get another ruling on another unenforceable NDA.

Legislation overcomes that. Legislation says, “This is now the default.” We’re changing the default, and in future, there is going to be a presumption that unless you can show that there was full and complete comprehension, that there was absolutely no duress, and thirdly — and this is the most important — that no other person will be harmed by the suppression of this information and no public interest will be harmed by the suppression of this information, you cannot enforce an NDA. And the truth of the matter is that you and I between us couldn’t come up with a single NDA that doesn’t affect the parties and that doesn’t affect the public interest.

I want, in a few years’ time, to look back on this and for people to be saying, “Can you believe that we let people get away with doing that for so long?”

And I think that’s where we’re going to be.

Top image is a screencap from Defender, Braunte Petric’s short doc about Julie Macfarlane and her work with self-represented litigants.

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