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When Loss of Privacy is Good

Trends in the Law Series

LOSS OF PRIVACY CAN BE GOOD

In May of this year, Uber announced that assault and harassment cases of riders, drivers and employees will be exempt from the requirement that all disputes go to arbitration and any settlements reached be subject to non-disclosure agreements, or NDAs. This change was announced by CEO Dara Khosrowshahi, and was prompted in part by the large number of women reported to have been sexually assaulted by Uber drivers, and by the alleged rampant sexual harassment in Uber headquarters. In all cases the women were denied their day in court by mandatory arbitration clauses contained in user agreements and employee contracts. Furthermore, if settlements were reached or compensation awarded, NDAs were required that prohibited the women from talking about their experiences.

It is precisely the secrecy of the private forum of arbitration coupled with the NDAs that allowed such a huge number of women to be assaulted without a public outcry—or class action lawsuit. But public attention began to focus on Uber and the unusually high number of sexual assaults of female riders despite this secrecy, and it reached a tipping point when CNN published an expose in April 2018 revealing that over 100 women (and that number is considered an underestimation) had been assaulted by Uber drivers. At the same time, the use of arbitration and an NDA to keep unwanted information from the public in another realm was in the news: Stormy Daniels aka Stephanie Clifford was fighting to hold her NDA with President Trump invalid.

ARBITRATION AND NDAs

Mandatory arbitration clauses and NDAs are common contractual provisions routinely included in standard employment contracts. Arbitration clauses typically require that the parties resolve their dispute privately, before a board of arbitrators. Very often NDAs are part of the arbitration; if a settlement is reached or compensation awarded, the party bringing the dispute must agree to keep the terms of it confidential. Many times the NDA has what is known as a liquidated damages provision in order to enforce this confidentiality. An example of one such provision is the now infamous one million dollars that Stormy Daniels was to pay for every violation of her NDA—i.e. for every time she spoke of her alleged affair with Donald Trump.

NDAs have become so common that approximately one-third of the U.S. workforce is bound by an NDA. Originally included in employment contracts to protect trade secrets, research and development, client lists and other proprietary information, NDAs now attempt to silence everything negative about corporate culture and management. Critics of such broad definitions of what NDAs cover argue that enforcing these kinds of NDAs hurts worker mobility and ultimately stifles competition, entrepreneurship and economic growth.

Congress recently introduced a bipartisan bill called the MeToo Congress Act, which would limit NDAs in harassment settlements. What might be worth considering is limiting the use of NDAs across the board and limiting their enforceability when used as standard language in employment contracts.

REVERSAL OF FORTUNE

Mandatory arbitration clauses and NDAs are also ubiquitous in the admission contracts of long-term care facilities (LTC facilities). An Obama-era regulation forbidding forced arbitration in LTC facility contracts was set to become effective in November 2016, but the nursing home industry challenged it in federal court. In July 2017, the Trump administration announced that it was rescinding the Obama-era regulation.

While a complete ban on mandatory arbitration was considered by some to be an overreach, many hailed it as a long-overdue remedy to a process where parties’ bargaining power was grossly unequal. In fact, the analysis leading to the Obama-era regulation found that the inherent inequality in bargaining power between the LTC facilities over prospective residents, and the disincentives arbitration and NDAs present to the staff of LTCs when jury awards and publicity are no longer a threat, support prohibiting forced arbitration and NDAs. The AARP and the ABA oppose rescinding the regulation, and 31 Senators wrote an open letter to the head of the Center for Medicare Services asking her to reconsider her support for rescinding the regulation, stating that they oppose the lack of accountability forced arbitration and NDAs promote.

CONTACT YOUR ATTORNEY

If you or someone you know has been harassed or assaulted while riding in an Uber, or if a loved one has been injured in a long-term care facility, contact Dave Thomas at The Thomas Law Firm for a free evaluation of your legal rights.

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