How Breaking a Nondisclosure Agreement Works

Nondisclosure Agreements in Legal Settlements

Harvey Weinstein Harvey Weinstein
Harvey Weinstein appears at his arraignment in court on July 9, 2018 in New York City. Weinstein, previously arrested for sexual assault against two accusers, was arraigned on three new charges. Weinstein had several employees sign NDAs where they agreed not to go public with sexual misconduct allegations. Jefferson Siegel-Pool/Getty Images

Disgraced movie mogul Harvey Weinstein and his production company settled sexual harassment lawsuits with at least eight women over the past three decades [source: Martin]. The details of those settlements — including what the women accused Weinstein of doing and how much money they received to drop the case — have been hidden from public scrutiny because each of Weinstein's accusers signed an NDA as part of the deal.

This is not unusual. It's now become standard practice in employment lawsuits for both parties to sign NDAs promising that they will not talk to anyone about the accusations made in the lawsuit or the amount of the settlement itself [source: Bond and Croft]. While settlement NDAs have been criticized as attempts to silence victims of sexual harassment, they also carry benefits for accusers.

First, an NDA encourages the defendant to settle and offer a monetary payout. The defendant may see no reason to settle if the accuser is free to talk about the alleged wrongs in the press and continue to sully the defendant's good reputation. By settling, the accuser can save money on legal fees and is guaranteed at least some money, which is not necessarily the case if the lawsuit goes to trial [source: Stevens and Subar].

Also, many accusers, including victims of sexual harassment, want justice for their mistreatment, but don't necessarily want to go public with the details of what happened. When both parties sign an NDA as part of a settlement, the victim can feel like the whole episode is behind them. Otherwise, there's a risk that the accused abuser could badmouth the victim in the press and harm their chances at future employment [source: Martin].

But looking at the other side, some legal experts argue that the use of NDAs in legal settlements deletes critical information from the public record. Society benefits from an open and transparent legal system in which the public has the right to know about accusations of bad behavior [source: Burdge]. For example, would you go to a dentist that's settled 10 malpractice lawsuits in the past five years? You'd never know if those settlements were protected by NDAs.

Clearly, the defendant in a lawsuit benefits if the accusations made against him or her aren't published all over the internet. And since a settlement isn't an admission of guilt, one could argue that it doesn't need to be in the public record. It's as if the lawsuit was dropped.

But hiding the details of settlements behind NDAs prevents victims of sexual harassment and other workplace abuses from sharing their story with coworkers and the public. Because Weinstein's alleged victims signed NDAs, they couldn't speak up and potentially protect future victims. Instead, the cycle of abuse was allowed to continue.

Still, some people make the risky decision to break their NDAs in order to break their silence. What could be the legal fallback?