Is World Speaking Up Against NDAs?

If you’ve worked in tech, you might have signed a Non-Disclosure Agreement (NDA). Even if it's commonplace, signing one conveys a great sense of responsibility. After all, we agree to a set of conditions that could feel daunting, including secrecy for years and dire consequences if we break that silence. 

An NDA is a legal contract that outlines how confidential information will be shared between two or more parties. This agreement protects anything from trade secrets to business strategies and technical designs, but that doesn't mean that only technical staff have to sign them. About 50% of private companies in the US enforce NDAs and non-compete clauses, and this percentage increases in roles with a demand for higher education and in the tech world. Moreover, these documents can include when employees must keep information private after they leave the company, ranging from one year to 10. This level of scrutiny makes perfect sense as once the competition gets hold of the slightest advantage, it could mean game over. 

From a theoretical perspective, NDAs make perfect sense for companies. They provide a legal, binding condition that protects their most valuable asset - intellectual property - against theft. Still, lately, NDAs are under the microscope, as they've also become excellent tools for manipulation and coercion. As a result, more and more companies are betting against them, and understanding this new movement against NDAs might mean the difference between a healthy and a toxic end to your current work relationship. 

This complexity can be concerning, especially considering the consequences of breaking an NDA. The most likely outcome is a legal action, and one of the important, and most recent examples, is that of Tyler Shultz. His name might not ring a bell, but you might recognize the company he worked for: Theranos.

After discovering that the entire company was a fraud, Shultz decided to expose it, only to face a barrage of threats of legal action because he had violated the terms of the company's NDA. To Theranos, it didn't matter that he was revealing a concerning and dangerous truth. Instead, he had to pay the legal consequences. At one point, the pressure got to him so much that he even considered ending his life. Eventually, the truth came out, and Shultz got his retribution. 

Theranos is only one of many examples. In fact, there are plenty that we will never know of, and such power has raised red flags, forcing change. In June 2022, one of the world's biggest companies did what seemed unthinkable: they ditched NDAs for new employees. Those already hired would have a less stringent imposition of non-compete clauses. That company is Microsoft, and the reason doesn't have to do much with kindness. Instead, it's due to a phenomenon taking over the corporate world. 

Since the late 2010s, many movements have pressured legislators and companies to ease up on NDAs and their frequent use. These efforts culminated in creating the Workforce Mobility Act of 2021, which stipulates the prohibition of NDAs, allowing their use only in certain circumstances.

Unfortunately, the Act didn't pass Congress in 2021, and a reiteration was again in the news in 2023, but this time with support from a big player. The Federal Trade Commission (FTC) also announced that it plans to propose a rule equaling a near-total ban on NDAs and non-competes. Though this effort concerns technology and intellectual property, it also wants to end NDAs for another reason. 

These controversial documents have been scrutinized for their power to silence employees in other concerning situations, including workplace harassment and discrimination. One of the main arguments against NDAs is that they can be used to prevent victims of harassment and discrimination, as well as other witnesses, from speaking out about their experiences. After all, NDAs typically include clauses prohibiting individuals from discussing the details of any settlement or severance agreement they have reached with their employer. 

One of the world's most notable cases involving an NDA as a silencer of harassment came in 2017 when several women accused film producer Harvey Weinstein of sexual harassment and assault. It later emerged that many of these women had signed NDAs as part of settlements with Weinstein's company, effectively preventing them from speaking out about their experiences. 

This isn't the only example, and the situation is so prevalent that in 2022, the US House of Representatives voted to pass yet another Act, the Speak Out Act, which allows employees to talk about harassment or assault by invalidating the very same clauses of the NDA that forbid them to do so. As noble as the idea seems, not everyone supports it. In fact, Uber was one of the main opponents, pressuring for changes to the bill. 

For years, we've worked with NDAs, and we usually considered them commonplace and took them for granted. After all, most of the time, their goal was to protect the company, but then the negative side came to light. 

The idea of tight, sealed secrecy can lead to a culture of fear within the workplace. When employees can't talk about pay, working conditions, and grievances, it's difficult for them to advocate for better working conditions. Unfortunately, that's not to say that these recent movements will eliminate NDAs altogether. After all, they must first be approved by the respective legislative powers, but they are a good sign of change. 

NDAs have been a common practice in the tech industry and beyond for decades. There's no denying that they're important, as they help protect intellectual property and trade secrets that could mean the slightest advantage in a very competitive world. Still, they're also an excellent tool for manipulation and coercion. Those seeking to challenge restrictive NDAs are increasingly advised to find a lawyer skilled in navigating the complexities of employment law and confidentiality agreements.

The power to silence employees regarding workplace harassment and discrimination has dire consequences, such as mental and physical health, leading to massive efforts to change or ban NDAs. Though the change won't be immediate, hopefully, we'll see a future where a document can’t silence employees when they need to speak up. 

‍

Those seeking to challenge restrictive NDAs are increasingly advised to find a lawyer skilled in navigating the complexities of employment law and confidentiality agreements.