United States: Lawmakers Take Aim: Will #Metoo Curb Nondisclosure Or Arbitration Agreements?

In 2017, the #MeToo movement highlighted the prevalence of sexual harassment in the workplace, toppling prominent figures in numerous fields. Sexual harassment has been unlawful for decades, of course, yet this vexing problem remains.1 In the wake of #MeToo, federal and state lawmakers are searching for new ways to complement existing antidiscrimination laws and help eliminate harassment. Although it may take several months for definite trends to solidify, this article identifies some legislative approaches we may see in 2018.

Limiting Enforceability of Nondisclosure or Confidentiality Agreements

Legislators have targeted nondisclosure agreements (NDAs) as a possible avenue for reform. Many organizations ask employees to sign NDAs for a variety of reasons, such as the protection of trade secrets. Where discrimination allegations are involved, however, employers sometimes insist upon an NDA as part of a settlement package. The NDA may require, for example, that the employee keep confidential all negotiations and the terms of the settlement. Such agreements might prevent the employee from disclosing even the existence of the settlement. Employees who breach these provisions may be obligated to pay some amount back to the employer. Opponents argue that these types of provisions prevent victims from going public with their accusations, thus enabling harassers and limiting transparency.

Some states have already contemplated bills that would curtail the use of NDAs in the resolution of harassment claims. Governor Cuomo of New York announced last week that he will propose a package of bills intended to remedy sexual harassment in the public sector, including a ban on confidentiality agreements relating to sexual assault or harassment, unless expressly authorized by the claimant.2 The New York legislature, meanwhile, is considering a measure (SB 6382A, AB8765) that would prevent the enforcement of certain NDAs. It would void "contract provisions which have the purpose or effect of concealing details relating to a claim of discrimination, non-payment of wages or benefits, retaliation, harassment or violation of public policy in employment" and specifically covers claims submitted to arbitration. 

A bill pending before the Pennsylvania Senate (SB 999) focuses more specifically on NDAs in the sexual harassment context. It would void contracts executed after the effective date that: (1) prohibit disclosure of the name of anyone accused of sexual misconduct (including stalking); (2) suppress or attempt to suppress information relevant to a sexual harassment investigation; (3) impair or attempt to impair the ability of individuals to report claims; (4) attempt to waive a substantive or procedural right relating to a claim of sexual misconduct; or (5) require someone to expunge relevant information from documents. For contracts executed prior to the effective date of the legislation, should it take effect, the bill would authorize employees to void agreements if entered into while under duress, incompetent or impaired, or a minor.

A California measure (SB 820) introduced on January 3, 2018, also seeks to eradicate secrecy in settlement agreements. Under this proposal, settlement agreements could be invalidated to enable parties to present underlying facts in a subsequent civil action. SB 820 provides that agreements preventing parties from disclosing facts giving rise to their dispute would be void as a matter of law, if the civil action alleges claims for sexual assault, sexual harassment, or workplace discrimination on the basis of sex. The law would affect agreements entered into on or after January 1, 2019. Nondisclosure restrictions could be included in settlement agreements only at the request of the claimant.

Additional bills affecting private employers are expected to appear in other states. A proposal limiting the use of NDAs has also been introduced at the federal level. The METOO Congress Act (HR 4396), currently in committee, would alter the procedures for the handling of harassment claims within the legislative branch.

Tax Consequences for Sexual Harassment Judgments or Settlements

Federal legislators employed a second tactic to rein in reliance on NDAs. The recently-enacted Tax Cuts and Jobs Act specifically addresses this issue. The new law amends section 162 of the tax code, which generally allows businesses to deduct certain ordinary and necessary expenses paid or incurred during the year as part of running the business. The amended tax law, however, erases that deduction for a settlement or payment related to a sexual harassment or abuse claim, if the settlement is subject to an NDA. Additionally, no attorneys' fees associated with such a settlement can be deducted.

Another tax-related proposal in the U.S. House would further reduce employer deduction opportunities under section 162. The STOP Act (HR 4495) would deny deductions for "any amount paid or incurred on account of a judgment or settlement (whether by suit or agreement and whether as lump sum or periodic payments) . . . originating from . . . a claim or accusation" of criminal sexual abuse or sexual harassment. The bill defines "sexual harassment" to include "unwelcome sexual advances, requests for sexual favors, or other verbal or physical harassment of a sexual nature." It also explicitly covers payments made "to require the non-disclosure of or otherwise prevent" claims of sexual misconduct. On the whole, the measure appears to curb deductions for "any amount paid or incurred in connection with negotiating or settling" a harassment claim—whether or not an NDA is involved.  Given the enactment of the Tax Cuts and Jobs Act, however, this standalone measure is not likely to advance.

Restricting the Use of Arbitration Agreements

As a third approach, legislators may attempt to restrict employer use of arbitration agreements. Many employers ask workers to sign arbitration clauses as a condition of their employment. Under such agreements, workers may be required to resolve any future employment-related disputes through arbitration, rather than through the judicial system.

Last month, federal lawmakers introduced the Ending Forced Arbitration of Sexual Harassment Act of 2017 (HR 4734, S 2203), which would significantly amend the Federal Arbitration Act. The bipartisan bill would invalidate predispute agreements (i.e., those signed before any dispute arose) that require arbitration of any sexual discrimination or harassment claims recognized under Title VII. This amendment would not apply to arbitration agreements between employers and labor unions, but no such provisions could limit the rights of employees to seek judicial review of their own claims.

New York's Governor Cuomo plans to propose a similar measure, which would void forced arbitration policies or clauses. The scope and details of that proposal remain to be seen.

Requiring Employer Disclosure of Settlements

Another federal bill before the U.S. House (HR 4729) would impose an additional disclosure requirement on employers that are obligated to submit an Employer Information Report EEO-1 annually. Covered employers would be required to indicate on that form "the number of settlements reached by the employer with an employee in the resolution of claims pertaining to discrimination on the basis of sex, including verbal and physical sexual harassment."

The bill liberally defines "settlements" to "include any agreement where anything of value is conferred to the individual raising the claim" in exchange for his or her decision to decline to pursue the claim. It applies to any agreement as well as any "internal mediation or other workplace resolution" that likewise resolves the matter. HR 4729 construes a wide variety of offensive conduct as "sexual harassment," such as unwanted touching, inappropriate verbal comments or gestures of a sexual nature, and "undue attention to or questions about a person's sexual relationships, sexual history, sexual orientation, or gender identity." The measure would also protect employees from retaliation and would require the EEOC to annually report information collected about settlements to Congress.

At the state level, Governor Cuomo is promoting a disclosure requirement for public contractors doing business with New York. He intends to introduce a measure that mandates annual reporting of the number of sexual harassment violations within such an entity, along with the number of NDAs entered into by the contractor.

Efforts to "shame" employers through such disclosures are likely to face stiff resistance from the business community. Although the federal bill is not expected to advance this session of Congress, employers should be mindful of these types of approaches, which seem to be gaining popularity and rely on the public disclosure of information to strong-arm employer compliance.3

Enhancing Training Requirements

Legislators, particularly at the state level, may explore the possibility of requiring employers to provide anti-harassment training for their employees in response to the upsurge in harassment allegations. A small number of states—primarily California and Maine—currently mandate such training for certain employers. The relevant agencies in roughly a dozen other jurisdictions strongly encourage anti-harassment training, but the vast majority of states do not require it.

Many employers already provide some sort of antidiscrimination instruction. But mandatory training may appeal to lawmakers looking for ways to reinforce civil rights laws and demonstrate a commitment to principles of workplace equality. In any event, now might be a good time for employers to conduct further antidiscrimination and anti-harassment training. Employers might also consider revisiting the content of their training materials and programs to ensure they are up-to-date, interactive, and generally as useful as possible.4

While we cannot predict which, if any, of the above laws might come to fruition, we can safely assume that employers will be feeling the aftershocks of the #MeToo movement for years. As employers review their anti-harassment policies, investigation procedures, and resolution practices, they should keep an eye out for these potential developments. We will continue to monitor legislative trends and will report on any significant progress in this area.


3 Last year, for example, the California legislature approved a bill (AB 1209) that required large employers (with 500 or more employees in the state) to begin collecting and providing the Secretary of State with information relating to gender pay differentials. The bill mandated that the information be publicly available by July 1, 2020. Governor Brown returned the bill without his signature, however, over concerns that the proposal was ambiguous, would not gather data that would contribute to the state's efforts to ensure equal pay, and could be exploited to bring about more litigation. A similar type of law took effect in 2017 in Great Britain. See  Tahl Tyson and Lavanga V. Wijekoon, New Mandatory Gender Pay Gap Disclosures Will Soon Take Effect for Large Employers in Great Britain, Littler Insight (Mar. 13, 2017).

4 In 2016, the EEOC issued a report analyzing harassment-prevention training efforts and offering numerous recommendations for employers. See, e.g., Kevin O'Neill, Christopher Cobey & Marissa Dragoo, Taking Workplace Training to the Next Level: EEOC Task Force Recommends Live, Interactive Harassment Prevention Training, Littler Insight (June 29, 2016). The EEOC task force's report is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions