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Confidentiality in Sexual Harassment Settlements

June 18, 2018 By Larry Schaefer

By Lawrence P. Schaefer |

I spoke on May 21, 2018, at the Upper Midwest Employment Law Institute about issues to address when settling sexual harassment claims, particularly when the company and/or individual paying the settlement insists on what is known as a “non-disclosure agreement” (“NDA”). The public has never been more aware of NDAs, given the issues raised in the “Stormy Daniels” litigation and the apparent practice by our current President when he was a private citizen to require such agreements when paying compensation to individuals he sought to silence. Are NDAs enforceable, and under what circumstances?

The Enforceability of NDAs

NDAs have been common in many types of settlement agreements in the past, particularly when sexual harassment claims have been settled. Part of the “benefit of the bargain” in resolving these claims without public litigation is avoiding the damaging publicity of the claim itself, regardless of how it is ultimately resolved.  Until recently, these NDA clauses in these type of settlements were enforceable provided that basic contract standards were met — i.e. consideration was provided, there were no indication of coercion, the terms were clearly stated and no misrepresentations occurred.

Confidentiality Matters

The value of confidentiality in these settlements accrues to both sides. Individuals I’ve represented making these complaints may want confidentiality, especially for those clients who have a very long career ahead, and don’t want to be publicly disclosed as someone who has made such a complaint against an employer.   Ignoring this potential “scarlet letter” implication for their career progression in the future, especially with the current powerful social media platforms, is naive.  The recent pressure in the growing #Me-Too movement toward complete transparency when these issues arise and are settled presents a thorny issue for individuals courageous enough to raise these claims.

The Tax Implications of NDA Enforcement

The IRS has recently passed a regulation which was intended to punish employers seeking to impose NDAs when settling these claims by no longer allowing legal fees incurred to be deducted as a business expense, thus discouraging these provisions with real tax penalties. This applies, however, to employers and employees. A recent blog written by my colleague, Bert Black entitled, Keeping It Confidential: The Effect of Nondisclosure Agreements on Deductibility of Attorneys’ Fees under the New Tax Law, examines the perhaps unintended consequences of this regulation (which could render taxable legal fees and costs incurred by the individual agreeing to an NDA).  States such as Washington have enacted legislation banning NDAs as conditions of employment, and many states legislatures are considering laws banning them in sexual harassment settlements (i.e. California, New York, New Jersey, Pennsylvania, and South Carolina).  Change is coming.

Protecting the Plaintiff’s Privacy: Four Strategies to Consider

How, then, do advocates for sexual harassment plaintiffs balance this growing demand for transparency with the client’s understandable interest in not being forever publicly associated with having raised and settled the complaint   It may be a difficult needle to thread, but I suggest four potentially effective strategies.

  1. There should be no real controversy in ensuring that any amount paid in settlement remain confidential, subject to any future right to subpoena this information by anyone.
  2. The identity of the complaining party isn’t the real focus of the need for transparency – it is the alleged perpetrator(s) that can/must be identified, to ensure that proper corrective action is taken, especially if the offending behavior ever recurs.  Therefore, limited confidentiality protecting the complaining party should be acceptable, as should any attendant NDA obligation that is limited in this fashion. Again, subpoena power in the future would pierce this confidentiality/NDA provision.
  3. There can be specific events in the future where any confidentiality/NDA obligation is automatically lifted, with notification obligations attendant to any such events to issue to all parties to the agreement.  For instance, if there is any future allegation of sexual harassment (broadly defined) against the alleged perpetrator(s), the settling party is promptly notified, the NDA/confidentiality obligation is automatically lifted, and the transparency sought by the “#Me-Too” movement is served.  An argument could be made that such a “conditional” NDA should also be excluded from the IRS regulation and similar legislation described above.
  4. When settling a sexual harassment claim where the opposing side insists on an NDA, make sure it is mutual, and make every attempt to raise other claims as well as additional consideration in settlement.  Consider emphasizing those claims, to the exclusion of the sexual harassment claim, in any written settlement agreement, to make every effort to avoid the tax penalty described above.

 Evolving Views on Protecting Plaintiff’s Privacy

There are no easy answers to these questions, or any strategy that ensure all privacy and confidentiality interests are properly balanced when reaching a settlement.  The best and safest scenario is to reject any such NDA obligation when alleging these claims and negotiating settlement, and have a client who is willing to accept the future “cost” of this transparency.   The most effective advocates, however, need to be fully prepared when the circumstances are different, and there is an understandable desire for some level of confidentiality.


Contact Lawrence P. Schaefer and the attorneys at Schaefer Halleen to schedule a case evaluation to discuss your situation with our employment law firm in Minneapolis. We will explain your legal position and help you make a well-informed decision about how to proceed.

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Filed Under: All Blog Posts, Lawrence P. Schaefer, Sexual Harassment, Women Professionals

Larry Schaefer

About Larry Schaefer

Lawrence P. Schaefer has earned the respect of judges and other lawyers for his thorough and aggressive client advocacy in negotiation and litigation. He focuses exclusively on representing people who have been subject to employment discrimination at work. Larry serves as the firm’s President and head of litigation. Read more >

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Schaefer Halleen, LLC

Schaefer Halleen, LLC is located at:
412 S 4th St
Suite 1050
Minneapolis, MN 55415
Phone:612-294-2600
Fax:612-294-2640
www.schaeferhalleen.com

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Based on 31 reviews
Schaefer Halleen, LLC
Schaefer Halleen, LLC
4.7
DeAijha Perry
DeAijha Perry
05:22 30 Dec 20
Henry V
Henry V
15:56 25 Sep 20
I worked with Larry Schaefer and Lauren D'Cruz. They enthusiastically took up my case. They showed creativity, good judgment and deep knowledge of the law in formulating the theory of the case. They also struck a fine balance between zealous advocacy and risk management. They were very responsive and provided timely status updates throughout our engagement. They took genuine interest in me as a person. I would recommend Schaefer Halleen to my family and friends without reservation.
Constance Lewis
Constance Lewis
15:46 10 Aug 20
I had the opportunity to work with Peter Christian. He was amazing to work with. He believed in my case from the moment we spoke and was diligent in working for me. He kept me in the loop on every aspect of my case, he allowed me to have input before decisions were made and fought for me from the very beginning to the end. He was prompt and followed through on everything he said he would. Peter was very professional, and timely. I truly appreciate the time and dedication to my case. Thank you Peter for taking the chance with my case and fighting for me. With Peter's expertise, my case was settled with a positive and favorable outcome. You were a pleasure to work with and I would highly recommend your services. Thank you again!
B Bowlby
B Bowlby
15:46 24 Apr 20
I cannot recommend Schaefer Halleen highly enough. I had a particularly hard employment issue and I found the people at S.H. to be excellent to work with. They are all very professional, very intelligent, handled me and my situation with care and always kept me up to date on where my case was at. In the rare instance when I contacted them by either phone or email I received a near immediate response.I was always made to feel that I was important and I always felt I was being given advice I could trust. At the end of the day my case was settled in a very timely manor and I am very pleased with how it turned out.Finally, the lawyers and staff at S.H. are some of the most experienced people in their industry and I was very impressed with their past accomplishments. I knew I could trust S.H. to handle my case after the very first meeting. If you need employment law help, Schaefer Halleen, LLC is the one and only firm I would recommend.
Roland Awasome
Roland Awasome
13:32 02 Apr 20
I am a professional and worked with many attorneys in the past. Peter is hands down the best out there. I can’t recommend him enough .
Laura H
Laura H
14:10 21 Feb 20
I am so thankful I found the Schaefer Hallen team to help me through one of the most difficult times in my life. Lauren always took the time to listen and was respectful and professional. Her attention to detail is impeccable, and she helped organize all my random thoughts and emails to help strengthen my case. Larry and Lauren kept me informed throughout the whole process and always made me feel like I was in control. With their expertise, my case was settled efficiently and with a positive outcome.
Mevhibe Atay
Mevhibe Atay
20:03 19 Feb 20
I had a great experience with the firm. My attorney Darren Sharp was very efficient, knowledgeable and kept me informed at every step. Very trustworthy and professional.
Ioannis Karampelas
Ioannis Karampelas
15:45 12 Sep 19
Extremely professional and humane treatment towards me as a person in severe trouble, perplexed by conditions generated totally out of my control. This law firm is outstanding.
Katy Eagle
Katy Eagle
16:54 16 May 19
Overall, the firm is great! Lauren D'Cruz is organized, thoughtful, and very pleasant to work with. I have enjoyed my interactions with everyone at Schaefer Halleen over the years. I highly recommend the firm and Ms. D'Cruz.
M M
M M
20:11 05 Apr 19
It is with great pleasure that I write this for Mr Schaefer and his capable people comprised of talent and empathy. I had a fear of Attorneys (due to my own weakness, no disrespect to the legal profession), but I felt pleasantly surprised after my visit to his firm located in the heart of Minneapolis - my home city that I am passionate about. Larry's office emblomized everything that I look for. The attorneys, the administrative staff, the decor, it all felt "happy" and "inter-connected". I had thought my case was too too hard to understand by others, however due to Larry's brilliance and savvy, it became evident to me that he understood it very well. He had a clear line of action and a resolve to seek justice with ethics. That was all that I desired. I hope Larry's office continues to serve the disability community, that it prospers, grows, and makes Minneapolis the best city in the world.
Sameh Said
Sameh Said
16:21 04 Apr 19
I am very thankful to Larry for helping me through a very difficult time of my life. My former employer discriminated against me and treated me very badly and I was forced to resign to end my struggle with this employer. I did not know what to do or who I can find to help me getting through this and restore my reputation and my employment. I met with several layers prior to my meeting with Larry and I can tell the difference immediately when I engaged with him. Larry told me what will happen in the first meeting and despite my process took several months, he was able to predict the successful outcome just through listening to me in that very first meeting. He has complete understanding of all employment related issues, he is focused and dedicated to help his clients getting back on track. His strategic thinking and the steps he made were the key to success. He also has a wonderful team that are just the right team to help. Quick response and timely feedback about what is going on with the case so you are always in the loop with the next step. Now I moved on to a new and a better employer and I feel I am beginning a new and a good chapter in my life, and I feel I can't thank Larry or his wonderful team enough for what they did to me and how they supported me to get through probably the worst chapter in my life.Thank you Larry
Rebecca Thavis
Rebecca Thavis
17:14 02 Apr 19
Larry truly went above and beyond. In each step of the case, he made sure I was aware of what was happening and the next steps. He called frequently, and followed my choices, making sure that I felt in control. I never felt like a victim, or less- he helped inspire me to fight for what I needed and deserved. If I had to go through it again, no questions asked, I would want Larry by my side every step of the way. His team is well organized, efficient, kind and discrete. I am forever grateful that Schaefer Halleen represented me, and I highly suggest them for any and all people who need empowering representation.
Joanne Simons
Joanne Simons
21:30 26 Mar 19
Excellent experience, outstanding staff, expedient, caring, respectful.
Jessie Lecy
Jessie Lecy
00:22 18 Mar 19
The humanness and genuine care for their clients separates this firm from others and makes it best in class.
John Styliaras
John Styliaras
23:55 17 Mar 19
Larry and his team at Schaefer Halleen helped bring to resolution issues at the workplace in an amicable manner. When I first approached Larry, I was not even sure what steps to take, what to do, did not even know if I needed a lawyer, or why I needed a lawyer. All I knew was that friends and colleagues told me to reach out to a lawyer. And when I asked around, his name and his firm's name kept on being mentioned by many. And the reputation was well deserved.Larry patiently and deliberately listened to my story, and then explained to me exactly why I needed a lawyer, and how he could help me. Immediately he laid out the plan about how to proceed. Instantly I was put at ease. Throughout a very long process, he provided me advice and guidance and was always willing to talk to me on the phone, whenever there were either updates, or I had questions and concerns.I am absolutely certain that I would had not been able to reach the resolution without Larry's and his team's steadfast guidance, advice, and impressive work. I recommend Larry and his firm unconditionally - the very best in the field.John C. Styliaras MD,MS
Suzanne Simpson
Suzanne Simpson
14:43 15 Mar 19
Lawrence is exceptional. He prepared me for the process, explained the possible outcomes and provided next step direction throughout. My experience was settled efficiently, and with a very positive outcome. I’m so glad I found Schafer Haleen, LLC.I highly recommend their services.Suzanne
Ricardo Vidal Gonzalez
Ricardo Vidal Gonzalez
18:49 12 Dec 18
I highly recommend the Schaefer Halleen law firm. Larry Schaefer was always available to answer any questions and his team was very professional. They work hard to get results and take the time to listen to the client’s goals.
annette miller
annette miller
00:40 07 Nov 18
I found the team to be professional, respectful and very well versed in employment law. I would recommend them to anyone looking for advice or expertise in this area.
Lynn Hassan Jones
Lynn Hassan Jones
14:18 31 Oct 18
I am a physician who recently hired Schaefer and Halleen to represent me in an employment discrimination case, my Atty was Jean Boler ESQ.They provided top-tier legal services to me for my case 2017 through my settlement in 1st qtr of 2018.This was excellent legal representation, specifically - very responsive, very prompt, extremely detailed and never off-putting.Absolutely would recommend without reservation!
Doc MoSho
Doc MoSho
19:40 02 Jul 18
They were attentive and responsive and dod a great job of diffusing the tension in a situation that could have been quite adversarial. They also did an excellent job of level setting before the process proceeded to far in an unrealistic direction. Great work.
the Dodger
the Dodger
14:28 04 Jun 18
Joyce Jenkins
Joyce Jenkins
19:03 02 Jun 18
Larry has been a great resource for several years. His response time, quality of response and follow up are excellent. He has been flexible enough to answer an impromptu calI and get a response back within an hour. I recall talking to Larry early one morning when there was 8" of snow and most businesses were closed. He was the only one in the office to keep my appointment.I have recommended Larry to more than a dozen of my friends and colleagues and I feel very comfortable recommending him to anyone.Derek Jenkins
John
John
23:57 01 Jun 18
An honest lawyer? YES! Larry was fantastic and I can’t thank him enough for his unbiased advice and support.
Ravi Balwada
Ravi Balwada
21:00 01 Jun 18
Larry is amazing. Very professional, takes the time to listen, is very knowledgeable and respected and if he says he can get you justice - you can count on it.
John Wichmann
John Wichmann
20:19 01 Jun 18
Larry and his team did an amazing job! They completed a task very smoothly and successfully that others said couldn't be done. I would hire him again in a heart beat.
Anne Dament
Anne Dament
18:52 01 Jun 18
Larry Schaefer is an incredible leader with an outstanding team of experts. They listen and care about their clients and work very hard on your behalf, educating you on your rights and guiding you through the process along the way. Everyone on the team is helpful and kind. 5 stars.
Bea Abdallah
Bea Abdallah
18:01 01 Jun 18
I strongly recommend this firm — so much so I once referred a colleague who they also helped. The firm is focused on their client’s specific issues, and unlike other attorneys I’ve worked with, they keep ongoing communication with you as the case advances. I am impressed with the professionalism and strong leadership from the staff, and deeply grateful for their good work.
Joanna Ramirez
Joanna Ramirez
16:54 01 Jun 18
I am grateful to Larry and his team. They did an excellent job of educating me about the legal process and keeping me updated on the status of my case. They had first hand knowledge about employment law in that they worked to get some of the legislation established.
Brett Rizk
Brett Rizk
12:26 13 Feb 17
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Recent Blog Posts

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