Confidentiality agreements: How do they work?

at 01:28 PM ET, 11/02/2011

One of the women who accused former Godfather’s Pizza CEO Herman Cain of sexual harassment in the 1990s has considered going public with her story. Her lawyer asked the National Restaurant Association to waive a confidentiality agreement that she signed as part of a settlement so the woman can speak freely.


Republican presidential candidate Herman Cain waits to be introduced prior to his address to the Northern Virginia Technology Council and the Consumer Electronic Association on jobs, the economy and American competitiveness November 2, 2011 at the Ritz-Carlton Hotel in McLean, Virginia. (Alex Wong - GETTY IMAGES)
Both women involved in the story are bound by non-disclosure agreements. Cain has refused to say whether he will ask the association to release the women from those pacts.

But what exactly are confidentiality agreements, and what is the punishment for breaking them?

Confidentiality, or non-disclosure, agreements, can be used to protect sensitive information or trade secrets. But confidentiality agreements are often part of settlements in contentious disputes between employers and employees, or former employees. Most include both a mutual ban on speaking about the details of the settlement and a blanket non-disparagement clause, in which both parties agree not to make negative statements about the other.

In cases with large financial settlements, stiff financial penalties for speaking out are often worked into the agreement — these are called a liquidated damages clause.

For example, lawyers for the church of Bishop Eddie Long are asking for $900,000 from three young men for violating a confidentiality agreement related to a sexual abuse case.

In a case like Cain’s, with a relatively small settlement, it’s more likely that the breach would go to civil court for damages to be awarded to the plantiff.

The plantiff can also seek an injunction — a court order barring the other party from continuing to speak — by showing that further disclosure would cause irreparable harm. Some settlements include a clause agreeing that any harm would be irreparable, which makes it easier to argue for an injunction before a judge.

Some agreements also call for any dispute to be settled by arbitration rather than in court. Others include payment of any legal fees as part of the cost of breaching the agreement.

But these agreements are not iron-clad. Their power depends on the willingness of an exposed party to go after an accuser.

Prosecutors in Boston pressured their local Roman Catholic archdioceses into releasing victims of abuse from confidentiality agreements. In Los Angeles, the archidocese had a change of heart.

"Confidentiality agreements don't mean much any more in any kind of jurisprudence," Cardinal Roger Mahony said in 2002. “If it helps the victims, I could care less about confidentiality agreements.”

Confidentiality agreements are also often renegotiated. Both parties can find reason to ask for a change. For example, an employer might be sued and need to reveal details of an employee’s departure as part of that case. An employee might apply for a new job and need to explain his or her record. Or, as in the Cain case, the situation might have gone public despite the agreement.

Debra Katz, an expert in sexual harassment and employment law, said that Cain’s comments on the settlement would violate any agreement, so his accuser should feel free to speak.

“Cain has violated any kind of confidentiality and non-disclosure agreement,” Katz told The Fix. “He has completely impugned the integrity of these women by saying these were trumped-up charges and they were found to be baseless. I would also take the position that he’s violated any kind of non-disclosure by speaking about payment.”

For the National Restaurant Association to sue Cain’s accuser for speaking out now, she said, is in­cred­ibly unlikely.

In fact, it seems like the woman is now having second thoughts — but not because of the confidentiality agreement. Rather, she is worried about the personal ramifications of her name becoming public.

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