Pennsylvania’s Pending Legislation Aims to Ban Nondisclosure Agreements Relating to Sexual Misconduct: Senate Bill 392

By: Natalie Anderson, Vol. 67, Staff Writer

Pennsylvania is taking steps to further the #MeToo campaign that has been gripping the nation: it currently has two pending bills, one in the house and one in the senate, which would impact an employer’s ability to have nondisclosure agreements (“NDAs”) relating to sexual harassment or discrimination in both employment agreements and settlement agreements. ^[1] The effect of NDAs on the legal system has been highlighted by infamous cases such as the Harvey Weinstein case and the Bill Cosby case. ^[2] The two laws take different approaches to ensure that sexual harassment or assault victims have the best options available to them. ^[3] In this two-part blog post, these pending bills will be analyzed in terms of their effect on both the employer and employee. This piece will focus on Senate Bill 392.

For employers, Senate Bill 392 restricts NDA provisions relating to harassment, abuse, or discrimination in both employment agreements and settlement agreements. ^[4] In terms of employment agreements, Senate Bill 392 is strict and bans any provision that has the purpose of:

1. Preventing an individual from disclosing harassment, abuse, or discrimination;
2. Requiring an individual to waive any substantive or procedural rights relating to a claim of harassment, abuse, or discrimination; or
3. Impairing the ability of an individual to report a claim of harassment, abuse, or discrimination. ^[5]

For settlement agreements, Senate Bill 392 is less strict: it bans any provision in an NDA that has the purpose of:

1. Preventing the disclosure of factual information related to the claims of the settlement agreement;
2. Suppressing information that is relevant to a court proceeding or investigation; or
3. Preventing the individual from testifying. ^[6]

Interestingly, Senate Bill 392 allows for the above terms in a settlement agreement if the employee agrees to the terms voluntarily “with a full understanding of the terms of the agreement.” ^[7]

The provision in the bill that allows for voluntary NDA agreements gives the employee more freedom to decide how they want to proceed with their claim. ^[8] This means that an employee who does not have the money for litigation, or does not have the desire to litigate, can conclude the litigation promptly to move on. ^[9] Additionally, nondisclosure provisions often are an important bargaining tool for employees who have little leverage to obtain their desired settlement amount. ^[10] The voluntary provision allows survivors who have no intention or means to litigate to still obtain the desired settlement amount. ^[11]

Senate Bill 392 tries to strike a balance between the need for stricter guidelines for employers who take advantage of NDAs to protect serial harassers, while understanding that survivor autonomy is still paramount. ^[12]

The second blog post in this series, Pennsylvania’s Pending Legislation Aims to Ban Nondisclosure Agreements Relating to Sexual Misconduct: H.B. 938, will discuss the House’s attempt to address the issues NDAs cause in terms of limiting survivor’s ability to pursue different legal remedies for the misconduct.