Non-disclosure agreements (NDAs) are commonly used in business relationships to protect sensitive information and maintain confidentiality; however, recent legal battles, such as the high-profile case involving Tiger Woods, have shed light on the complexities surrounding the enforceability of NDAs. Woods, the legendary golfer, is now facing allegations that he forced his ex-girlfriend, Erica Herman, to sign an NDA in exchange for her silence about their relationship. This is not the first time that a celebrity has been accused of using NDAs to silence their ex-partners (i.e. Donald Trump and Stormy Daniels). The recently passed Speak Out Act is meant to address this concern by making it more difficult for sexual abusers to use NDAs to silence their ex-partners.
Non-disclosure agreements are contractual instruments that establish a confidential relationship between parties by prohibiting either party from disclosing certain information to third parties, and are often considered essential to safeguarding businesses’ trade secrets, proprietary data, and other confidential matters.
In New York, the courts generally recognize and enforce NDAs, provided that they include clear and unambiguous language, outline the confidential information covered, define the duration of the agreement, and possess valid consideration, meaning both parties must receive some form of benefit in exchange for their non-disclosure.
Recent changes in legislation, however, such as the Speak Out Act, have significant implications for NDAs in cases involving sexual harassment. The Speak Out Act, which was enacted to protect victims and promote transparency, allows individuals to void NDAs if sexual harassment or abuse is involved. This law empowers victims to speak out and take legal action, even if they have signed an NDA.
In the case of Tiger Woods and Erica Herman, Herman is challenging the enforceability of the NDA, alleging that Woods initiated a sexual relationship with her while she was his employee and used the threat of termination to coerce her into signing the agreement. She asserts that Woods' alleged threat to terminate her employment if she refused to sign the NDA constitutes sexual harassment because Herman was only required to sign the NDA due to her sexual relationship with Woods.
While NDAs serve a legitimate purpose in protecting confidential information, the Speak Out Act recognizes the importance of preventing the silencing of victims of sexual harassment; therefore, courts must strike a balance between upholding contractual obligations and safeguarding individuals' rights to speak out against abuse.
Ultimately, non-disclosure agreements are crucial tools for protecting confidential information in business relationships; however, their enforceability can be subject to scrutiny by evolving legal frameworks, such as the Speak Out Act, particularly when sexual harassment allegations arise. The introduction of the Speak Out Act adds an important layer to the evaluation of NDAs in such cases, emphasizing the empowerment of victims and the need to balance confidentiality with accountability.
The attorneys at Outside Legal Counsel LLP have extensive experience in all facets of employment law and can assist in drafting and negotiating NDA’s.
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