If you’re facing sexual harassment at work and considering a settlement, you’re about to encounter legal documents that could significantly impact your future. Non-disclosure agreements (NDAs) and settlement agreements have been standard practice in harassment cases for decades, but recent legal reforms have dramatically changed what’s allowed and what’s not.
Here’s what you need to know: these agreements can provide closure and compensation, but they can also limit your ability to speak about your experiences, warn others, or even cooperate with government investigations if not properly structured. Understanding your rights before signing anything is crucial.
Disclaimer: This article provides general information for informational purposes only and should not be considered a substitute for legal advice. It is essential to consult with an experienced employment lawyer at our law firm to discuss the specific facts of your case and understand your legal rights and options. This information does not create an attorney-client relationship.
The Shifting Legal Landscape of Harassment NDAs
The rules around confidentiality in harassment settlements have changed dramatically since 2018. States like New York, California, and New Jersey have passed laws limiting how NDAs can be used in harassment cases, and more states are following suit.
These changes came about largely due to high-profile cases revealing how NDAs were used to silence victims and enable serial harassers. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 further strengthened employee rights by allowing harassment victims to pursue claims in court rather than forced arbitration.
Understanding Settlement Agreement Components
When you’re presented with a settlement agreement, it typically contains several key sections. Each one deserves careful scrutiny.
Financial Terms and Tax Implications
The monetary portion of your settlement isn’t just about the total number. How it’s structured matters significantly for tax purposes.
Settlements for physical injuries or physical sickness are generally not taxable, but emotional distress damages typically are taxable unless they stem from physical injury. Lost wages are always taxable and subject to withholding. Your agreement should clearly specify how payments are categorized.
Many employees don’t realize they can negotiate for the employer to cover the additional tax burden through what’s called a “tax gross-up provision.” This ensures you receive the full settlement amount after taxes.
Release of Claims Provisions
The release clause is where you give up your right to sue. This section needs careful attention because once signed, you typically cannot pursue legal action for the harassment you experienced.
Standard releases cover all claims “known and unknown” arising before the settlement date. However, you cannot waive certain rights, including:
- Future discrimination or harassment claims
- The right to file charges with the EEOC
- Unemployment insurance benefits
- Workers’ compensation claims
- Whistleblower rewards
Negotiating Favorable Settlement Terms
You have more negotiating power than you might think, especially if you haven’t filed a formal complaint yet or if the employer wants to avoid publicity.
What’s Negotiable
Confidentiality Scope: Push for narrow confidentiality that only covers the settlement terms, not the underlying facts. In states with protective legislation, insist on language that explicitly permits you to discuss your experiences.
Non-Disparagement Clauses: These should be mutual – if you can’t speak negatively about the company, they shouldn’t be able to speak negatively about you. Request carve-outs for truthful statements to government agencies or in legal proceedings.
Reference Provisions: Negotiate for a positive or neutral reference. Get specific language in writing about what will be said to prospective employers. Some agreements include a dedicated phone line that provides only dates of employment and position held.
Red Flags to Watch For
Several provisions should raise immediate concerns:
Overly Broad Confidentiality: Language that prevents you from discussing “any and all interactions” with the company goes too far. You should be able to discuss your work experience generally.
Liquidated Damages Clauses: These provisions set a specific dollar amount you’d owe for breaching confidentiality. They’re often set unreasonably high to intimidate. Push back on these or negotiate for reasonable amounts.
Admission of Wrongdoing: Never accept language suggesting you engaged in misconduct unless accurate. Standard agreements should include mutual non-admission clauses.
The Settlement Negotiation Process
Understanding the typical timeline and process helps you navigate negotiations more effectively.
Consideration Periods and Revocation Rights
Federal law requires specific consideration periods for certain settlements. If you’re over 40 and the settlement includes age discrimination claims, you must receive 21 days to consider the agreement and 7 days to revoke after signing under the Older Workers Benefit Protection Act (OWBPA).
Many states have extended similar protections to all harassment settlements. New York, for example, requires a 21-day consideration period for all NDAs related to discrimination or harassment claims.
Recent Legal Developments Affecting Settlements
Two major pieces of legislation have reshaped the settlement landscape:
The Speak Out Act (2022): This federal law makes pre-dispute NDAs unenforceable for sexual assault and harassment claims. If you signed an NDA when you were hired, it likely cannot prevent you from discussing harassment that occurred afterward.
State-Level Reforms: New York’s 2018 legislation prohibits NDAs in harassment settlements unless the complainant prefers confidentiality. California’s SB 331 (2021) expanded protections beyond sexual harassment to all forms of workplace harassment and discrimination.
These laws reflect growing recognition that confidentiality agreements have been weaponized to protect harassers rather than victims. Courts are increasingly scrutinizing these agreements and refusing to enforce overly broad provisions.
Making an Informed Decision
Before signing any settlement agreement, consider these critical factors:
Your Future Career Goals
If you plan to stay in the same industry, consider how confidentiality restrictions might affect your ability to explain employment gaps or job changes. Some agreements allow for limited disclosure to prospective employers with notice to your former employer.
Emotional Closure vs. Speaking Rights
Some survivors find that being able to speak about their experiences is essential to healing. Others prefer privacy and moving forward. There’s no right answer, but understanding your priorities helps guide negotiations.
Financial Needs vs. Long-term Implications
While immediate financial pressure might push you toward accepting an offer quickly, consider the long-term implications. Can you live with the restrictions? Will the settlement amount truly compensate for what you’ve experienced and any career impacts?
Key Settlement Components Checklist
Use this comprehensive checklist when reviewing any settlement agreement:
Protecting Your Rights During Negotiations
You don’t have to navigate this process alone, and you shouldn’t feel pressured to accept the first offer. Here’s how to protect yourself:
Document Everything: Keep records of all settlement discussions, including verbal offers. Email confirmations of verbal discussions create helpful paper trails.
Don’t Rush: Unless there’s a legitimate deadline (like a statute of limitations), take your time. Employers often create a false sense of urgency to pressure for quick agreements.
Understand Your Leverage: If the employer initiated settlement discussions, they’re motivated to resolve the matter. Your leverage includes potential publicity, the strength of your claims, and the cost of litigation.
Get It in Writing: Verbal promises about references, rehire eligibility, or other terms mean nothing unless they’re in the written agreement.
Alternative Dispute Resolution Considerations
Some settlement agreements include arbitration clauses for disputes about the settlement itself. Thanks to recent federal legislation, you cannot be forced into arbitration for the underlying harassment claims, but disputes about settlement terms might still be subject to arbitration.
Consider whether you’re comfortable with arbitration for settlement disputes. While faster and less expensive than court, arbitration typically favors employers and lacks the transparency of court proceedings.
Long-term Implications to Consider
Settlement agreements can have effects that last for years or even decades. Think through these scenarios:
Industry Networking: Can you attend industry events where former colleagues might be present? Some agreements restrict contact with former coworkers.
Social Media Presence: Many agreements now include social media provisions. Understand what you can and cannot post about your former employer.
Future Legal Proceedings: If you’re called as a witness in another case against your former employer, understand your obligations and rights.
Moving Forward After Settlement
Once you’ve signed a settlement agreement, compliance is crucial. Violations can result in having to return settlement funds plus damages. Create a simple system to remember key restrictions:
- Keep a copy of your agreement in a secure location
- Set calendar reminders for any time-limited obligations
- Maintain records of any required or permitted disclosures
- Document any post-settlement communications with your former employer
Remember that settlement agreements are legal contracts. If your former employer violates their obligations, you have recourse. Similarly, they can pursue remedies if you violate your obligations.
Taking Action: Your Next Steps
Settlement negotiations in harassment cases require careful consideration of both immediate needs and long-term implications. Every situation is unique, and what works for one person might not work for another.
Before signing any settlement agreement, consider having it reviewed by an experienced employment attorney who can identify potential issues and negotiate more favorable terms. The cost of legal review is minimal compared to the long-term impact of an unfavorable agreement.
If you’re facing sexual harassment at work or navigating settlement negotiations, you don’t have to go through this alone. Contact Nisar Law Group for a consultation. Our experienced employment attorneys understand the complexities of harassment settlements and can help you secure terms that protect your interests while providing the closure and compensation you deserve.
We’ll review your agreement, identify areas for negotiation, and ensure you understand exactly what you’re signing. Don’t let your employer’s legal team be the only voice in the room – get the advocacy you deserve.
Remember: You have rights, you have options, and you have the power to negotiate for better terms. The decisions you make now will affect your future, so make them with full knowledge and proper legal guidance.
