With a few minor tweaks here and there, your company has probably relied on the same severance and employment-related settlement agreements for years. Sure, you touch base with your friendly neighborhood employment lawyer from time to time to ensure there haven’t been any significant legal developments that necessitate revisions. But aside from peripheral alterations, these agreements have, by and large, retained their same basic form and content.
Among the most important terms of your company’s “form” severance and settlement agreements is the confidentiality clause. This provision protects your business from the public disclosure of potentially damaging allegations of workplace wrongdoing. This is particularly important when the asserted allegations exaggerate or skew the facts or are flat out spurious. Or when the alleged misconduct was perpetrated by a rogue manager, unbeknownst to management. Regardless of the reason, the confidentiality clause is of paramount importance. In fact, outside of the employee’s release of claims, your company – like so many others – considers this clause to be the seminal term of the agreement. Without it, your company might be far more hesitant, if not outright unwilling, to enter into potentially costly severance and settlement arrangements with current and former employees.
Two recently enacted laws – one at the federal level and one spurred by New York legislators – threaten to topple the long-standing use of confidentiality clauses in severance and settlement agreements, at least in cases involving sexual harassment. Below, we discuss each of these laws, as well as how you and your company can navigate the proverbial minefield of recent nondisclosure-related legislation.