Non-disclosure agreements, sometimes referred to as confidentiality agreements, are often used by companies and employers throughout Canada to prevent employees or business associates from divulging specific information to third parties. In recent years, these agreements have come under severe scrutiny, particularly in the wake of the #MeToo movement, which highlighted the fact that victims of sexual harassment have not spoken out about their experiences due to a fear of breaking an agreement to stay silent.
Non-disclosure agreements were originally created to be used in business to prevent the sharing of trade secrets and other confidential or proprietary information to potential competitors. More recently, they have become a ubiquitous part of employment law claims, ranging from wrongful dismissal, discrimination, and harassment. It is becoming more common for employers to request an employee sign a non-disclosure agreement, or for employers to include a confidentiality clause in employment claim settlements. Contrarily, some experts and legislators are calling to end this practice, and some provinces have taken steps in this direction.
What is a Non-Disclosure Agreement?
A non-disclosure agreement, or “NDA” as they are commonly called, may be in the form of a full contract, or sometimes a clause within a contract, which acts as a restrictive covenant preventing the signer from discussing sensitive information. In employment scenarios, this confidential information may be related to internal processes, trade secrets, or financial details. Outside of employment circumstances, non-disclosure agreements are being used in situations involving mistreatment towards an individual. Workplace discrimination and sexual harassment are two forms of misconduct which often involve a request that the complainant sign a non-disclosure agreement to prevent them from discussing the situation with others. Generally this helps the company protect its reputation, regardless of whether the company has effectively disciplined or terminated the wrongdoer.
Non-Disclosure Agreements for Sexual Assault and Workplace Sexual Harassment Spark Controversy in Canada
Hockey Canada recently made headlines when it was reported that a woman, who sued the organization after she was allegedly sexually assaulted by several players from the Canadian Hockey League, was asked to sign a non-disclosure agreement as part of her settlement. This agreement prevented her from speaking about the allegations, however the organization offered to release her from the covenant just days before appearing before a parliamentary committee tasked with investigating the handling of the incident. This same issue has plagued others who have faced mistreatment and abuse in the workplace.
In another CBC article, a woman who worked for the University of British Columbia spoke anonymously about a similar circumstance. After facing sexual harassment from her boss, she reported the behaviour to her employer, seeking an apology and requesting that the school handle the situation. Instead, she was offered a settlement which allowed her boss to remain employed in his role, but would require the complainant to leave her employment in exchange for a monetary settlement. Further, she was required to sign a non-disclosure agreement which prevented her from speaking about the issue to anyone. She was advised that she had no choice but to sign the agreement if she wanted to settle and move on. Speaking about her discomfort with the terms of the settlement, she expressed her concerns to her employer about potential future victims:
“I said ‘what if this happens again and another victim finds me and then comes to me?…Can I share my story with that person? The answer was no…It made me feel sick.”
Are Non-Disclosure Agreements Enforceable?
Canadian courts have established certain guidelines to determine whether a restrictive covenant in an employment situation, such as a non-disclosure agreement or a non-compete clause in an employment contract, is enforceable. To be considered legally valid, the covenant or agreement must be reasonable, specific, and not outside of the public interest.
In cases involving workplace harassment or discrimination, the company involved will typically offer a monetary settlement in exchange for the complainant’s agreement to keep the not speak of the incident to anyone else. A non-disclosure agreement or clause would be unlikely to prevent the signer from reporting a crime to the police, as this would be considered to be against the public interest. In non-criminal cases, such agreements can have the unintended consequence of enabling harassing or abusive behaviour, as explained by a Halifax lawyer speaking with the CBC:
“On a wider societal level, it’s a big problem because it keeps the public from knowing that there are predators out there because of the confidentiality that’s required from the people who have suffered abuse. So there’s less accountability, there’s less knowledge. And we can have repeat predators out there without being able to stop them because … people have been silenced.”
In light of increased public awareness surrounding issues of harassment and discrimination in the workplace, in addition to the power dynamics often involved between the parties in a harassment or discrimination complaint, many are speaking out against the use of non-disclosure agreements in these circumstances. The argument against the use of non-disclosure agreements focuses on a few key issues, including:
- Non-disclosure agreements silence victims by preventing them from having agency over their own experiences;
- Non-disclosure agreements don’t allow victims to heal properly because they cannot speak about their experience to others; and
- Non-disclosure agreements perpetuate a culture of silence that protects wrongdoers and allows them to continue their pattern of behaviour, potentially enabling them to victimize others.
PEI Became the First Province in Canada to Restrict Use of Non-Disclosure Agreements in Employment
Some provinces have taken active steps towards restricting the use of non-disclosure clauses in settlement agreements in certain situations. In May 2022, Prince Edward Island became the first province in the country to enact a bill which limits the use of such agreements in cases involving abuse, harassment, and discrimination. Under the bill, non-disclosure agreements or confidentiality clauses can only be used at the request of the person who complained about the behaviour. Manitoba and Nova Scotia are considering similar bills.
It remains to be seen if other provinces will follow suit. Some have pointed out the potential pitfalls of limiting the use of non-disclosure agreements or confidentiality clauses, expressing that they are often the sole bargaining chip that complainants of harassment or discrimination have. An efficient tool in managing corporate reputations, some companies view the ability to keep details of such claims private is very attractive, and are willing to pay the money for. Without this security, some feel that victims may lose the upper hand in negotiating settlements going forward.
Contact DBH Law for Skilled Representation in Workplace Disputes
The lawyers and staff at DBH Law believe in relationship-building and fostering strong, long-term connections with our clients. We provide a complete range of employment law services as well as effective risk management to clients in a variety of industries. We advise and represent employees and employers in issues including wrongful dismissal, termination packages, and workplace safety. We pride ourselves on the fact that most of our clients were referred to us by former and current clients. To learn more about how we can help you, us online or by phone at 403-252-9937.