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Uber Fighting Bill That Would Nix #MeToo Nondisclosure Pacts

Sept. 29, 2022, 5:52 PM

Uber Technologies Inc. has lobbied behind the scenes against components of legislation that would nullify some nondisclosure agreements for workers alleging sexual harassment and assault, people familiar with the efforts said.

The bill, known as the SPEAK Out Act (S. 4524), would make nondisclosure agreements—like those signed as part of an employment contract—unenforceable if signed before a dispute arises. The legislation has had bipartisan, bicameral support since its introduction.

The ride share giant has taken issue with several provisions within the legislation, including that it would apply to independent contractors as well as employees and the bill’s definition of “pre-dispute” clauses, according to a document obtained by Bloomberg Law. Uber also sought to keep the dollar amounts of monetary settlements secret, even if other aspects of the nondisclosure agreement wouldn’t apply.

Uber’s requested changes didn’t make it into a version of the bill advanced by the Senate Judiciary Committee earlier this month—the last step before full Senate consideration.

“Uber supports survivors telling their story, and shining a light on the societal issue of sexual assault,” an Uber spokesperson said in an email. “It’s why Uber is the only company in our industry that has produced two comprehensive Safety Reports, and in 2018 voluntarily eliminated forced arbitration and confidentiality about the facts of what happened for individual claims of sexual assault or sexual harassment by Uber riders, drivers or employees.”

The SPEAK Out Act is an attempt to rein in the widespread use of nondisclosure agreements—sometimes called “gag orders” by defenders of women’s rights—a practice that has created persistent barriers for workers alleging sexual harassment and assault, even as more protective state laws cropped up in the post-#MeToo era. Data released in March 2021 found that in an analysis of 33,000 workers and 1,800 firms, approximately 57% of the workforce was covered by a nondisclosure agreement of some kind.

Legal scholars, however, say the SPEAK Out Act is very narrow, applying only to a certain subset of nondisclosure agreements, and to specific claims. It doesn’t address nondisclosure agreements signed after a dispute has arisen, and it wouldn’t pertain to all other allegations of discrimination, such as race or religion.

When Does it Apply?

The legislation strictly applies to “pre-dispute” nondisclosure and nondisparagement agreements, with the bill text defining a sexual harassment dispute as “relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” Uber’s lobbying efforts have been focused on one of the more open-ended provisions in the bill, which is what kind of scenario would qualify as “pre-dispute.”

The document obtained by Bloomberg Law showed that Uber wished to define pre-dispute agreements as those signed before the sexual assault or harassment claim is “asserted.” Ultimately, academics say judges will have to answer the question if the bill is signed into law.

Though the bill text ventures to define a “dispute,” there’s an open question of when that point may occur along the timeline of a worker first being harassed to a lawsuit potentially being filed in court. A survey of a handful of legal scholars provided no consistent answer.

“You can make the argument that you don’t have a dispute before you file a lawsuit,” according to Jennifer Drobac, a professor at Indiana University’s law school who studies harassment and discrimination law. But, according to Drobac, companies will likely make the argument that it exists long before that.

“Does the dispute arise when the first molestation occurs?” she said. “Or when the first complaint is filed?”

Jennifer Bennett Shinall, a professor at Vanderbilt University’s law school, presented another potential definition of “dispute.”

“I don’t know that there’s a clear answer to that,” she said, “but I would certainly say that as soon as the employee reports to either a supervisor or human resources, the dispute has started.”

Orly Lobel, a professor at the University of San Diego’s law school, said the line could be drawn before even the timeline of a complaint, or the incident itself.

Any push to regulate nondisclosure agreements is still a net positive, Drobac added. This bill would establish a floor upon which other legislation—either at the federal or state level—could build upon, she said. To date, at least 16 states have laws on the books pertaining to nondisclosure agreements, some much more restrictive than the SPEAK Out Act.

A Start

Workplace civil rights laws—as established by Title VII of the 1964 Civil Rights Act and other laws since then—protect against many forms of discrimination, including sexual harassment and assault. The SPEAK Out Act, however, applies solely to #MeToo claims.

“The effectiveness of the Speak Out Act or any other version of this type of bill depends on the scope of what is prohibited,” Rachel Arnow-Richman, a labor and employment law professor at the University of Florida’s law school, said in an email. “This particular bill is extremely narrow.”

That it only applies to pre-dispute agreements restricts it further.

“So as drafted, the bill would not prohibit the use of confidential settlement clauses, i.e., provisions agreed to in the settlement of an existing dispute that in exchange for payment the victim will (among other things) promise not to discuss the underlying complaint,” said Arnow-Richman.

Employers are aware of the perception of nondisclosure agreements, particularly after they have played a role in high-profile matters like the Harvey Weinstein scandal, and have watched as states have stepped in to regulate, according to Dennis P. Duffy, a director with Kane Russell Coleman Logan PC in Houston. It may be, as a practical matter, easier to avoid nondisclosure agreements altogether, or to be “deliberate” in ensuring they only apply to what must expressly be kept confidential—like trade secrets, for example.

“Perception is driving a lot of the political conversation,” he said. Employers needs to “take heed” of that perception, and accordingly weigh the costs and benefits of using such an agreement, Duffy said.

Ultimately, “a judge is going to have to decide when a dispute actually exists, and you know that is going to have to vary, state to state,” said Drobac. “It’s a start, that’s what it was designed to be.”

To contact the reporter on this story: Paige Smith in Washington at psmith@bloomberglaw.com

To contact the editors responsible for this story: Genevieve Douglas at gdouglas@bloomberglaw.com; Patrick Ambrosio at PAmbrosio@bloombergindustry.com