During the Michael Bloomberg debate beatdown by Elizabeth Warren on Wednesday night, an employment law topic popped up:
Should Mayor Bloomberg release his former employees from their nondisclosure agreements so that they can talk about whatever it was they threatened to sue his company about?
Bloomberg said he would not release them, and he caught all kinds of grief for saying so — especially from Sen. Elizabeth Warren and Vice President Joe Biden.
But is Mayor Bloomberg wrong?
There are confidentiality agreements that employees sign when they are hired. These normally prohibit employees from disclosing the employers’ trade secrets and confidential/proprietary information and may have non compete clauses.
Because they are normally signed before there is any type of legal dispute, they do not release the employer from claims of discrimination. Those employment-law claims generally cannot be waived before there is an actual or potential claim, and some cannot be waived without approval of a court or government agency. These “pre-dispute” NDAs are not the type that the Democrats were giving Mayor Bloomberg grief about.
The other type of NDA arises after an employment dispute has occurred, say a harassment claim: “In exchange for compensation, I promise that I won’t sue the employer or my boss, and we all promise not to talk about my allegations of sexual harassment or the settlement itself with anyone else ...”
This is the type of NDA and why Mr. Bloomberg is within his rights not to release his ex-employees from their post-dispute NDAs:
No. 1: Not everybody who claims to be wronged is right. If you are in HR, or a lawyer on the defense side — like me — or maybe even a lawyer on the plaintiff side — you know that just because someone says they were treated unfairly or illegally doesn’t mean it’s true.
No. 2: Companies and their executives aren’t necessarily guilty just because they get sued.
No. 3: We don’t know whether all of these NDAs relate to alleged misconduct by Mr. Bloomberg, or whether they relate to alleged misconduct by employees of Bloomberg L.P.
No. 4: Pressuring employers to release former employees from their NDAs could eventually work against the former employees because employers will be more reluctant to settle.
Many times the employer settles because it is not worth the disruption and expense to fight. If confidentiality is not part of the bargain, then the employer may decide settlement is a less-attractive option, which could harm accusers.
No. 5: “Floodgates” is not a fallacy. If an employer starts letting ex-employees out of their NDAs, the word will get out that the employer is a soft touch who is willing to settle cases. If my client had 20,000 employees in 167 locations, like Mayor Bloomberg, this would be a big concern.
No. 6: A contract is a contract. The employer paid good money and probably agreed to some nice non monetary terms as well (agreeing not to contest the employee’s unemployment claim, promising to give a neutral employment reference, non disparagement, etc.). In exchange for that, the employee dropped the dispute and agreed not to talk about it anymore.
My Counsel: So, you go, Mike “Black & Blue” Bloomberg! Stand firm on those NDAs and Warren will lead another Round 2 brutal, Mike beatdown. Debate viewers will be thrilled.