The following was posted on Techdirt 10/16/17.
In the wake of the news about Harvey Weinstein’s apparently serial abuse of women, and the news that several of his victims were unable to tell anyone about it due to a non-disclosure agreement, the New York legislature is considering a bill to prevent such NDAs from being enforceable in New York state. According to the Buzzfeed article the bill as currently proposed still allows a settlement agreement to demand that the recipient of a settlement not disclose how much they settled for, but it can’t put the recipient of a settlement in jeopardy of needing to compensate their abuser if they choose to talk about what happened to them.
It’s not the first time a state has imposed limits on the things that people can contract for. California, for example, has a law that generally makes non-compete agreements invalid. Even Congress has now passed a law banning contracts that limit consumers’ ability to complain about merchants. Although, as we learn in law school, there are some Constitutional disputes about how unfettered the freedom to contract should be in the United States, there has also always been the notion that some contractual demands are inherently “void as against public policy.” In other words, go ahead and write whatever contractual clause you want, but they aren’t all going to be enforceable against the people you want to force to comply with them.
Like with the federal Consumer Review Fairness Act mentioned above, the proposed New York bill recognizes that there is a harm to the public interest when people cannot speak freely. When bad things happen, people need to know about them if they are to protect themselves. And it definitely isn’t consistent with the public interest if the people doing the bad things can stop people from knowing that they’ve been doing them. These NDAs have essentially had the effect of letting bad actors pay money for the ability to continue the bad acts, and this proposed law is intended to take away that power.
As with any law the devil will be in the details (for instance, this proposed bill appears to apply only to non-disclosure clauses in the employment context, not more broadly), and it isn’t clear whether this one, as written, might cause some unintended consequences. For instance, there might theoretically be the concern that without a gag clause in a settlement agreement it might be harder for victims to reach agreements that would compensate them for their injury. But as long as victims of other people’s bad acts can be silenced as a condition of being compensated for those bad acts, and that silence enables there to be yet more victims, then there are already some unfortunate consequences for a law to try to address.