Disclosed: It’s Time to Put Restrictions on Non-disclosure Agreements

What do Harvey Weinstein, GM, Johnson & Johnson, the Catholic Church, and the City of Markham all have in common? We can’t disclose it.

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(Part One of Two)

Sexual harassment perpetrated by trusted professionals. Cultures of rape and abuse protected by treasured institutions. An addiction crisis that the pharmaceutical industry might have not only hidden, but encouraged. Looking back over these events from the past few years might be disturbing. However, there is one issue common to all these problems that lawmakers, advocates, and others should solve: It’s time for Illinois officials to decide when non-disclosure agreements (NDAs) are appropriate, and when they are not.

Spotlight on abuse of non-disclosure agreements

Non-disclosure clauses are a common part of contracts and settlements. They allow companies to work together, individuals to trust each other with valuable information, and judicial systems to manage information without broadcasting business secrets or personal information. However, they also can limit free speech and keep serious and dangerous situations from reaching a resolution.

Transparency concerns for NDAs are as relevant in the public sector as they are in the private sector. In fact, in the public sector, where the expectations of transparency are higher, the use of NDAs should be almost non-existent. Yet, there are recent examples of such agreements and protections creating problems for the public. Even in situations where non-disclosure might seem harmless, it can work directly against existing laws and the public’s right to information.

Legal settlements

The risk of NDAs sheltering bad actors has been especially salient in the wake of recent, high-profile sexual harassment and abuse scandals tied to Harvey Weinstein, the Catholic Church, and others. NDAs are a common component of legal settlements, even in the public sector.

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Contracts

Employment and other contracts in the private sector often contain non-disclosure clauses. When it comes to workplace harassment, such clauses can be a serious impediment to identifying and fixing internal problems. However, when such clauses are used in the public sector, they may directly conflict with the law, in particular, laws protecting the public’s right to information.

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Protective orders

Sometimes the courts, a public body themselves, can impose protective orders that complicate the enforcement of existing laws and hide hazards from the public. This came to a head in two cases last year. In the first, the City of Chicago ended a years-long courtroom debate over documents acquired from a subsidiary of Johnson & Johnson, about the marketing of opioids. In the second, a settlement agreement for $120 million between General Motors and 49 states, including Illinois, reignited a long running debate about the legitimacy of NDAs and protective orders hiding faulty consumer products. The settlement was awarded after faulty ignition switches were linked to more than 300 deaths.

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It’s time to talk about NDAs

In Illinois, FOIA and other laws that guarantee access to government information should protect individuals who break NDAs under certain circumstances. However, as we see in the cases like Teva and Janssen Pharmaceuticals’ protective orders, enforcing these laws is not always easy. Nor is it reasonable to imagine that employees like those who signed an NDA with the City of Markham will be familiar with such laws. In addition, breaking a contract can put you in a courtroom -- whether or not the law eventually protects you. From an employee's perspective, if they speak out, they expose themselves to financial and legal risks. If they stay silent, they do not.

Be it sexual assault, corrupt systems, or faulty products -- it is becoming clearer and clearer that the public-at-large is not adequately protected by the current practices used for NDAs and protective orders. As we will detail in Part Two of this policy series, other states already have taken steps to ensure that NDAs honor transparency in the public’s interest. In fact, decades ago legislators in Illinois tried and failed to prohibit the concealment of public hazards by Illinois’ courts. We can’t imagine a better time for them start the conversation again.

About the Author

Rachel L. Leven

Rachel Leven is the BGA’s policy manager focusing on Chicago and Cook County. Before joining the BGA, Leven ran communications for the City of Chicago Office of Inspector General (OIG), a nationally renowned municipal oversight agency.