Weighing the pros and cons of banning non-disclosure agreements

By Tony Poland, LegalMatters Staff • A ban on the use of non-disclosure agreements (NDAs) in cases of workplace sexual harassment, misconduct or violence may be well-intentioned but requires careful and deliberate consideration, says Toronto employment lawyer Ellen Low.

“It really is a nuanced issue. As someone who does a fair amount of work for victims of workplace sex-based harassment, I have some serious concerns about a blanket piece of legislation that prohibits non-disclosure agreements,” says Low, principal of Ellen Low & Co. “I worry about the practical day-to-day application.”

The Ontario government recently proposed changes to the Working for Workers Act and announced it will also be launching consultations to restrict the use of NDAs.

“Unfortunately, seven out of 10 workers experience a form of harassment or violence in the workplace, rates that increase for women and gender diverse workers,” David Piccini, Minister of Labour, Immigration, Training and Skills Development, told the media. “My message to these creeps looking to hide behind NDAs is simple: Your time is up.

“Our government will be looking at options to restrict the use of NDAs while protecting the rights of victims and survivors. A victim should never be prevented from telling their story because of an aggressive NDA practice of an employer. And perpetrators should never be able to buy their safety.” 

Call to ban NDAs not new

Low tells LegalMattersCanada.ca that the call to ban non-disclosure agreements is not new.

“There are provinces across Canada that have some sort of NDA legislation in place,” she says. “There is legislation that effectively limits or truncates when a non-disclosure agreement can apply and now Ontario quite rightly is also looking into whether a blanket prohibition against NDAs is a good idea.

“I understand why people want to ban them. I am just not confident that enough thought has gone into the ramifications of applying an abject ban on something that can otherwise relatively easily be negotiated and discussed in good faith,” Low adds. “An NDA does not have to be a full-stop gag order.” 

It is important to look at the issue in a broader sense, she says. 

“The first thing people have to understand is that presently in Ontario you cannot sue for harassment. It is not a tort that has been recognized in this province,” Low explains. “If you are harassed at work, you cannot sue for ‘harassment.’ A victim might consider suing for discrimination under the Ontario Human Rights Code (OHRC) or for a breach of Occupational Health and Safety Act provisions.”

Both the perpetrator and the employer can be held liable for harassment, she says.

‘Long-established line of case law’

“From a human rights perspective, the employer is very much responsible for some of the conduct committed by an employee,” says Low. “There is a long-established line of case law at the Human Rights Tribunal of Ontario (HRTO) that holds that an organization may be liable for acts of harassment carried out by its employees in a number of circumstances. 

She says the employer can be held liable if the corporation knew or reasonably should have known about the harassment and failed to take steps to respond. Another reason to seek a remedy from the employer is if the conduct created “a sexually poisoned work environment,” which is a free-standing violation of the OHRC, Low says.

Often in cases where workplace harassment can be proven, the perpetrator and/or the employer will agree to a settlement in exchange for a non-disclosure agreement, she says.

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“Traditionally, the NDA would say something along the lines of the individual who was the victim of the harassment cannot speak about the events or experience giving rise to the settlement,” Low says. “That is the primary reason there is talk of banning non-disclosure agreements. They are too often seen as silencing victims of sex-based harassment in the workplace in exchange for compensation.

“There seems to be a prevailing theory that people are entering into settlement agreements which prevent them from speaking about their experience at all,” she adds. “I believe though, that other people who experienced something similar should be able to contact other victims in order to bolster their own cases or validate their own experience. Victims of harassment should be free to speak about their experiences without the risk of being in breach of a settlement agreement that comes with financial consequences.”

Needs of complainant should be considered

She says “the needs and wants of the individual complainant” should be considered when deciding whether a blanket probation is appropriate.

An outright ban is unnecessary, Low argues, adding there are “a great number of options available with respect to a properly negotiated nondisclosure agreement.” 

“If the parties are able to achieve an early settlement where there is going to be some kind of agreement in exchange for compensation it doesn’t mean the victim must sign a blanket NDA saying they can never talk about it for any reason,” she says. “I have had a great deal of success doing truncated or abridged nondisclosure agreements that specifically contemplate different circumstances.”

“For example, we could agree not to talk about the amount of compensation that is being received but the victim might be permitted to talk about the events that happened without directly naming the employer,” Low adds. “You could also contemplate what is known as a sunset clause so nobody can talk about it for a certain number of years.”

The other option might be to include a specific “carve-out” 

For instance, if a third party approached the victim with specific questions about working for the employer, or with an individual employee, they would be permitted to share their experience,” says Low.

She says she is concerned about “a chilling effect” a blanket ban of non-disclosure agreements could have on harassment claims.

While NDAs can deprive a victim of the right to speak about their experience, a ban “robs them of the right to remain anonymous,” says Low.

As it stands now when a sexual harassment application is heard in civil court or at the HRTO, the victim’s initials can be used rather than their full name to protect their right to anonymity.

Concern about misinterpretation

“What I have heard is that people are apprehensive that a blanket ban of NDAs will no longer protect their anonymity if they file a complaint against someone in the workplace,” says Low. “They are concerned that it means the employer will be able to identify them publicly. They may not necessarily understand that the blanket prohibition against NDA is, I believe, designed so that no one can hide in the shadows. I do really worry about misinterpretation of that blanket statement.”

She says she questions whether people will stop reporting these types of incidents if they don’t understand the legislation.

“I wonder if people will stay silent on conduct that should otherwise be brought to light. I am concerned it could further drive inappropriate conduct underground because people won’t want to report it If they don’t necessarily understand the application of the legislation,” Low says.

While perpetrators should not be allowed to hide in the shadows, NDAs can provide victims with real justice, she says.

“An outright ban could conceivably make it significantly more difficult to settle a case,” Low reasons. “Without NDAs there will be perpetrators who will likely not want to admit liability for their conduct. And the employer is realistically not going to want to settle because the employee could then go and say whatever they want.

“There are a number of different avenues to consider without necessarily banning non-disclosure agreements to seek redress for someone who has experienced workplace sex harassment or harassment of any kind.”