Nondisparagement Clauses Could Interfere with Ability to Assert New York City Sexual Harassment Claims

Multiple employment laws in New York City prohibit employers from discriminating on the basis of sex, which includes sexual harassment. Employers, however, may use contractual provisions to limit employees’ ability to file suit. An arbitration clause in an employment agreement, for example, may require the submission of any disputes to a private arbitrator, which can have various advantages for employers. Another contractual provision that has received attention recently is the nondisparagement clause, which states that one or both parties may not make public comments disparaging the other party. Some nondisparagement clauses expressly prohibit making reports to government regulators, leading to concern about chilling effects on employees who might otherwise come forward with allegations of sexual harassment. Critics further allege that nondisparagement clauses provide protection for individuals who engage in sexual harassment by keeping the allegations against them secret.

Nondisparagement clauses can appear in employment agreements, severance agreements, and settlement agreements resolving litigation. They have some legitimate purposes, but keeping employees and former employees from asserting their rights under statutes like Title VII of the Civil Rights Act of 1964 is not among them. A series of court decisions indicates that employers sometimes use these clauses to prevent individuals from bringing lawsuits, or even from discussing their grievances with other employees. Since enforcing a nondisparagement clause involves legal action in court, it can affect free speech rights under the First Amendment.

The Equal Employment Opportunity Commission (EEOC) has addressed at some length whether employees can waive protections of laws like Title VII in employment contracts. It formally adopted a policy of “preserving access to the legal system” in its interpretation of contracts with nondisparagement clauses. A body of caselaw also addresses the use of nondisparagement clauses, balancing among the various interests at issue. A New York City federal district court, for example, ruled that a nondisparagement clause in a settlement agreement “must include a carve-out for truthful statements about plaintiffs’ experience litigating their case.” Lopez v. Nights of Cabiria, LLC, 96 F.Supp.3d 170, 180 n.65 (S.D.N.Y. 2015).

A decision by the Tenth Circuit directly addresses the alleged use of a nondisparagement clause to prevent a lawsuit, allowing the EEOC to bring an interference claim against an employer on its employees’ behalf. EEOC v. CollegeAmerica Denver, Inc., 869 F. 3d 1171 (10th Cir. 2017). The case began when an employer accused an employee of violating the nondisparagement clause in her employment agreement by discussing a possible age discrimination claim with another former employee. The employee filed several charges with the EEOC. Shortly after the first charge was filed, the employer filed suit against the employee in a Colorado state court for breach of contract. As part of its response before the EEOC, the employer provided samples of employment contracts containing nondisparagement clauses.

The EEOC found reasonable cause to believe the employer had engaged in unlawful age discrimination. It filed suit against the employer for age discrimination and for interference with employees’ ability to exercise their statutory rights. The district court dismissed the EEOC’s interference claim, 75 F.Supp.3d 1294 (D. Colo. 2014), but the Tenth Circuit reversed this ruling and remanded the case.

The sexual harassment attorneys at Phillips & Associates advocate for New York City employees and job applicants, helping them assert claims for unlawful workplace practices under federal, state, and city laws. Contact us at (866) 229-9441 or online today to schedule a free and confidential consultation to discuss your case. You should not be afraid to hold your employer accountable for mistreating you.

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