KemLaw

There’s an old saying that it takes many years for a company to build a reputation but only seconds to tear it down.

Put simply – the reputation of any company is easily tarnished.

So how can employers large and small protect their reputation as good employers in the event harassment occurs in their workplace?

One option involves the use of confidentiality and non-disclosure clauses in settlement agreements.

How might that work?

Let’s say a particular employer has a manager found to be guilty of sexual harassment. In cases where a private settlement is reached between the employer and the aggrieved party, it is permissible to use nondisclosure, non-disparagement and confidentiality provisions in settlement agreements to keep the matter confidential.

Do those provisions violate Section 7 of the National Labor Relations Act which prohibits employers from interfering with employees’ rights “to organize, to form, join, or assist a labor organization, to bargain collectively, to engage in other concerted activities for mutual aid or protection?”

No.

In 2016, the National Labor Relations (NLRB) ruled that “an employer can require an employee to keep confidential the terms of a settlement agreement in exchange for reinstatement” to their former position. In this instance, the NLRB commented that it has long preferred “private, amicable resolution of labor disputes, whenever possible,” and “that an employer may condition a settlement on an employee’s waiver of Section 7 rights if the waiver is narrowly tailored to the facts giving rise to the settlement and the employee receives some benefit in return for the waiver.”

As a general rule, nondisclosure, non-disparagement and confidentiality provisions can protect employers to a degree from the actions of employees who have behaved improperly – giving employers a measure of protection against having their workplaces labeled as hostile.

Are there limitations to the usefulness of these provisions?

Yes.

Generally speaking, these provisions can be challenged if they interfere with an official Equal Employment Opportunity Commission (EEOC) investigation. There are also provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Defendant Trade Secrets Act that may impact the enforceability of nondisclosure, non-disparagement and confidentiality provisions.

If you’re an employer in Connecticut and need guidance on the topic of nondisclosure, non-disparagement and confidentiality agreements, contact the attorneys at Kainen, Escalera & McHale. We do one thing and one thing only – we are an employer defense law firm – in fact, we are one of the largest employer defense law firms in the region. What’s more, each of our attorneys has over 20 years of experience in employment law and labor law matters and can provide your business with comprehensive legal counsel ranging from assistance with necessary preventive measures to trial advocacy. Please contact us if we can help you.

The information provided above is made available by Kainen, Escalera & McHale, P.C. for educational purposes only. It is not intended to provide specific legal advice to your individual circumstances or legal questions. You acknowledge that neither your reading of, nor posting on, this site establishes an attorney-client relationship between you and our law firm or any of the attorneys in our firm. This information should not be used as a substitute for seeking competent legal advice from a licensed professional attorney in your state nor is it provided for the specific purpose of soliciting your business on any particular matter. Readers of this information should not act upon anything communicated in it without seeking professional counsel.