Can (and Should) Legal Departments Stop Employee Tell-Alls?
Can companies stop their employees from writing about what goes on behind closed doors? Maybe. Should they? Probably not.
December 15, 2017 at 02:17 PM
5 minute read
Former Uber Technologies Inc. employee Susan Fowler, who back in February blogged about the harassment she faced while at the ride-hailing company, has a book in the works that will “expose the systemic flaws rampant in the startup culture” and will reveal “previously unreported details of what happened after she went public” about her experiences.
Fowler is hardly the first employee to pen a tell-all that offers a glimpse inside an influential company like Uber. Last year, an ex-Facebook Inc. employee provided a look at the company's “militant” culture. In 2015, a Lululemon employee penned an essay describing the “delusional, hypocritical and cult-like” environment within the company. And in August 2016, an ex-employee wrote about how she “got scammed by a Silicon Valley startup” because her former employer failed to pay her. Though the company was not named in the post, the startup was later determined to be now-defunct WrkRiot.
When disgruntled employees leave a company, some may opt to air their grievances by way of a book or in a blog post. But is there a way for legal departments to stop these tell-alls? There might be, according to employment attorneys, but it can be difficult to do and it's probably not the wisest decision in most cases.
One potential silencing mechanism that many companies are utilizing is a nondisparagement clause as part of severance agreements, said Cliff Palefsky, a San Francisco plaintiffs employment attorney with McGuinn, Hillsman & Palefsky.
There are of course overlapping policy considerations, Palefsky pointed out, such as rights afforded by the National Labor Relations Act allowing employees to discuss working conditions freely. Not to mention that nondisparagement clauses don't offer a good remedy for companies, according to Palefsky, “because what are you going to do, go to court about this negative thing?”
Nevertheless, companies are relying on these clauses to preclude people from talking about certain aspects of the job, Palefsky said. “It's becoming almost standard to include nondisparagement clauses in severance agreements without even thinking about it,” he explained, and unlike with a defamation claim, which a company could consider if exposed information from an employee is believed to be false, disparagement just means negative information, he added.
Palefsky pointed to American Apparel Inc.'s threat of a $1 million penalty for violating employment agreements, which included disparaging the company or founder Dov Charney, as a particularly egregious example of a nondisparagement clause.
He said he understands the desire to protect the business, but explained that companies need to do some “soul searching” when it comes to the way employee claims of misconduct are treated.
Companies also rely on confidentiality agreements, said Wendi Lazar, a partner at Outten & Golden, whose focus includes representing executives in employment matters. “It's very common for employees to agree to confidentiality agreements when they join the company,” Lazar said, adding that these can come in the form of a separate agreement, or could be included in offer letters, company handbooks or codes of conduct.
At Uber, for instance, as of February 2014, confidentiality was addressed in both the company's handbook and code of ethics, according to public records obtained by Corporate Counsel.
“Confidential information includes, but is in no way limited to financial records, information regarding client or partner transactions, client or partner account information, information regarding clients, partners, vendors or suppliers, or any documents or information regarding company operations, procedures or practices,” the handbook reads. “The duty not to use or disclose confidential information remains in effect during and after employment.”
While these agreements often preclude current and former employees from talking about confidential and proprietary information, Palefsky said it's not likely that personal experiences and harassment would be included. “Most people are signing trade secrets agreements, but sexual harassment is not a trade secret, it's a dirty secret,” he said.
Some employment lawyers said they are also seeing employment agreements with indemnification clauses that may put employees on the hook for any damage they cause to a company. And this could come into play if an employee writes a tell-all book, said Alan Sklover, who works on employment matters as senior partner at Sklover & Co.
“Everyone is becoming more risk-averse,” Sklover said, so it's not necessarily surprising to see these clauses in employment contracts, both to discourage people from talking and to reduce risk. “I personally think it's a harbinger for what's to come,” Sklover said.
As for whether companies should make efforts to silence tell-alls, Palefsky said that when employees are able to speak freely about workplace issues, “it's a very effective way to ensure proper conduct.” What's more, he said, it “probably wouldn't be well-received” for a company to go after an employee who's complaining about harassment or discrimination.
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