Settling a case usually means a non-disclosure agreement

And what is a non-disclosure agreement, a/k/a non-disparagement agreement?

I signed one, years ago, and have read a couple of others. It is a really uncomfortable document. Someone has offended you, been unjust to you. You agree to settle, presumably for some money. And the company or person you settle with demands that you sign this non-disclosure thing before he turns over the money. You will be agreeing not to talk or write about him, not disparage him in any form or manner.

It’s a bribe. Your righteous settlement becomes ugly hush money. He (or the company) is telling you, “Take the money and shut up. Forever.”

Huh? Does this mean that you can’t tell your nearest and dearest about your lousy experience, and thoroughly trash this person or company? Never mind your First Amendment right to comment, speak or criticize, you can’t say anything bad about this person or you can be sued for the settlement money?

Basically, yes.

Chuck Klosterman, who writes The Ethicist column in the NYT Sunday Magazine, dealt with these agreements in last Sunday’s question-and-answer piece, “Settlement House.”

The question he was asked was:

I previously worked for a company run by a genuinely bad boss. I did my homework before starting there, but no one who worked there would say anything (and a search for lawsuits involving the firm came back clean). It turns out that was because many previous complaints had been settled out of court. Upon my departure, I had my own suit for wrongfully withheld wages settled out of court. Part of my settlement was a prohibition on discussing the case or making “disparaging” remarks to anyone. Now a professional acquaintance is considering working for this company. Does my ethical obligation to share what I know about this employer outweigh my legal obligations? B.C., PORTLAND, ORE.

Klosterman’s answer is carefully calibrated and very clever. (You can read the whole thing here; skip past the first Q&A re TV commercials, if you like, although that’s an amusing interchange.)

I had an even more pressing situation than Klosterman’s questioner, and had to step around my non-disclosure agreement to help someone get some justice. I managed it successfully — although I was questioned for hours, in a witness deposition.

It’s a wrenching moral problem.

UPDATE: Settlement agreements with non-disclosure/non-disparagement clauses are primarily attached to employment lawsuits.


This entry was posted in Law, suits and order and tagged , , . Bookmark the permalink.