NDA INFORMATION
Please note that this information is for public education, it does not constitute legal advice.
The above video explains what NDAs are and how they are misused.
If you have already signed an NDA and wish you had not, it is important for you to know more about the law currently says about enforcing an NDA.
There are increasing legal challenges to the enforceability - the legality - of an NDA. They can be challenged in court on the grounds of “:undue influence” or coercion, lack of “informed consent”, or how overreaching the NDA is and harmful to the public interest. One Ontario case has said clearly that NDAs are not a requirement for a settlement agreement and there must be a clear and separate consent to the NDA. If you have been told you “must” sign, that is not accurate or true.
However in law, if you have signed and NDA you are assumed to have consented/ agreed to be bound by it. We do hear from people at CBMS who have broken their NDAs with no consequences or come-back from the other side/ the employer. But in some cases NDAs are still being enforced when they are breached. Another Ontario decision in 2023 upheld an NDA and ordered the signer (who was found to have breached by posting on Linkedin simply “I have settled my discrimination case with….”) to pay back her compensation.
There continue to be cases brought that challenge the legality of an NDA. Lawyers who support CBMS are helping with some of these. We have also seen case challenges brought by self-represented litigants who have lost, and then been ordered to pay signficant court costs to the other side. The challenges continue but there is a lot of uncertainty.
There are now some US cases (mostly involving Donald Trump, see for example for example Denson v Trump ) where a court has overturned an NDA on the grounds of “vagueness” and “unreasonableness.”
You can read about Canadian cases on NDAs below, under “Canadian Caselaw”.
SHOULD YOU BREACH YOUR NDA?
We shall not tell you that you should break your NDA, however appalling it may be in its impact on you. That must be your decision. There are many risks and uncertainties involved in breaking your NDA and we want to give you the following legal information:
It is possible that the likelihood of bad publicity will discourage your employer / the other side from suing you if you choose to break your NDA. Enforcing an NDA against a signer is a “bad look” for many employers, especially since the Hockey Canada saga revealed how toxic NDAs are for escaping accountability. We have seen many breaches go unchallenged for this reason.
However, others have been sued for breach (see above) and the consequences may be both financially significant (they may be ordered to return their compensation) and traumatic.
The uncertainty over how the courts treat NDAs means that you cannot assume that there will be no legal force to your NDA or that it will not be enforced against you. Challenging it in court without legal representation, unfair as this is, raises the chances that you may have high costs awarded against you if you lose (and so far,, every legal challenge in Canada has failed).
This is why we need legislation!
HAVE YOU SIGNED AN NDA?
Please help us to change the law to protect people from NDAs!
Here are some of the ways you can fight back against NDAs
Write your own story (without any personal identifying information) for our “testimonies” page.
SHARE YOUR STORY
Tell your MP or MLA that you support a ban on NDAs that cover up wrongdoing.
Here is a template you can work from .
INFORM YOUR MEMBER OF PARLIAMENT
Consider asking the other side to release you from your NDA. We have provided a template letter to help you to do this.
ASK FOR A RELEASE
ENGAGE WITH YOUR UNION
Tell your union representative about your dissatisfaction with the NDA and request the union to avoid future NDA compromises. Encourage education and safeguards for union members.
Telling your lawyer you regret your NDA agreement is not a breach of contract. Your lawyer may not realise how much you resent the NDA and how much suffering it has caused you.
INVOLVE YOUR LAWYER
SHARE OUR RESOURCES AND SUPPORT OTHERS FACING NDAs
Can’t Buy My Silence Canada has many open source access materials and information/education resources about NDAs. Check our Resource Hub for many resources and regular updates. Please feel free to circulate them at your workplace, in your union, your church, and to your friends.
THINKING OF SIGNING AN NDA?
It has become ’standard’ for lawyers to ask for an NDA in settlement or grievance negotiations. But an NDA is NOT a required part of an agreement or settlement. You do not have to agree (read about the legal decision here) and certainly not without thinking through the real consequences of being gagged for ever. People often tell us that they were told that they “must” sign an NDA. This is not true. Some tell us that they were told that they had to decide by a certain time, often a matter of days. The law says that they must be “reasonable” in setting deadlines. The only required clause in a settlement agreement is a “release” that says that you agree not to take legal action with regard to the complaint now or in the future.
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Negotiate for a one-sided confidentiality clause that protects your identity but does not stop you from speaking about your experience to whomever you wish.
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Negotiate for an agreed period to think abut what you want to do and consult with others. You can talk to anyone you want before you sign an NDA. And remember, legal negotiations should NOT be like high pressure sales! You are not required to sign on the spot, but many people feel rushed into agreement.
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If you are not comfortable or do not fully understand the NDA, it is always your right to decline. Most cases (95%) will settle anyway, with or without an NDA.
Look at our resource “Your Right to Say No: A Guide to Resisting an NDA” for tips and strategies.
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Negotiate for fewer restrictions in the NDA or a one-sided confidentiality clause
You can ask for specific individuals to be listed whom you can speak with - for example, family, friends and health professionals or therapists. You can also ask for the NDA to be time-limited - for example to 1 or 2 years rather than being indefinite.
You may also negotiate for a one-sided confidentiality clause that protects your identity but not at the price of protecting the other side. This does not stop you from speaking about your experience to whomever you wish but ensures that the other side cannot name you or speak about you.
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Federal law gives public sector workers the right to report anything they believe to be wrongdoing (Public Service Disclosure Protection Act). Provincial public servants have similar protection in most provinces. Private sector workers are protected as whistleblowers under occupational health and safety laws. All these whistleblowing rights cannot be overridden by an NDA.
However the laws on protected disclosures by private sector employees are variable and require some researching, depending on where you live. As examples, here is an excellent resource for Ontario and the relevant statute in Manitoba.
A non-disclosure agreement or an NDA is a clause in a document that restricts sharing information with others that is designated as “confidential”. This means at minimum the whole agreement and its terms are confidential, and sometimes more; for example, the negotiations leading to the resolution, or the underlying circumstances of the complaint or suit.
An NDA is a clause inside an agreement. These clauses are sometimes referred to as confidentiality or privacy agreements. Today they are rarely labelled “non-disclosure agreements” but rather “confidentiality agreement” which sounds less toxic – but it is exactly the same thing.
An NDA is an agreement to keep the underlying complaint and how it was resolved confidential. An NDA has no time limits and is intended to bind the parties to stay silent forever.
Scroll down to see an example and learn how to recognize an NDA.
RECOGNIZING AND UNDERSTANDING AN NDA
WHEN MIGHT I BE ASKED TO SIGN AN NDA?
Since our campaign began, we have found the use of NDAs in many more situations than we had first imagined.
1. Most commonly, non-disclosure agreements are used in the settlement of a complaint - the resolution of a workplace complaint or a grievance - or a lawsuit, what is sometimes described as an “out-of-court” settlement. The purpose of the NDA is to cover up a situation that the other side does not want to be publicly known. In other words, any situation that brings shame on them personally or (if an organization/ company) affects their public reputation.
2. NDAs are also sometimes used pre-emptively, that is, before any misconduct has taken place. For example, we now see NDAs frequently in hiring contracts at the beginning of an employment relationship, or even before a particular event or a meeting - before any problems or conflicts have arisen. This is to ensure that if there is a complaint or other conflict in the future, you are already bound not to speak about it.
3. NDAs are also commonly used at the outset of a workplace investigation or a mediation. Historically, workplace investigations (or mediations) asked for confidentiality during the period of the investigation/ mediation (as well as protecting the admissibility of statements made in court, to encourage honest and frank discussions). Today most “terms” of investigation or mediation that you will be asked to sign before that process begins are indefinite NDAs which prohibit talking about the investigation , what any individual says or the substance of your complaint forever.
Here is a breakdown of where we see NDAs most often:
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If you are negotiating over leaving your job and moving to another employer, or simply terms of severance before retirement. You may be asked to sign an NDA saying that you will not raise any complaints about your past experiences (or “disparage” the employer)
If you make a formal complaint about (eg) discrimination, harassment, benefits, equal pay, NDAs are often required before any investigation begins (i.e. as a condition of opening an investigation or participating in a mediation).
If you are bringing a human rights claim against your employer. Provincial Human Rights Commissions use template NDAs in settlement agreements.
If you begin a new job. This may be because you will have access to commercially sensitive information (“trade secrets” e.g. a company invention or innovation that has commercial value for the company; or have access to private confidential client information). Our campaign does not challenge or change this original use of NDAs. However, we are also seeing NDAs on hiring (“pre-hiring” or “pre-emptive” NDAs) which commit the new hire to making no complaints about any workplace misconduct that may occur in the future. For example, promising not to make a complaint about sexual harassment in the future, or racism, or other discrimination or harassment. US federal law has already banned pre-hiring NDAs for sexual harassment
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If you sue in court or tribunal for harassment, discrimination, or sexual abuse, harassment or assault; any misconduct that will tarnish the public image of the other side/ defendant. You will probably also be asked to sign a non-disparagement agreement.
If you sue for product or service defects e.g. a product or service you bought, or a home you are having built. Many companies now require you sign an NDA (and usually a non-disparagement clause) before they will refund or replace a faulty product. This is to avoid bad publicity about defective products and effectively negates any consumer rights you have
If you make a complaint about professional services you contracted for, for example financial advice, or travel / vacation services. You will sometimes be asked to sign a (“pre-emptive”) NDA at the beginning of the service relationship; or if you do not and make a complaint, you will be asked to sign one then. In some cases, these NDAs block your right to access to the services regulator
If you sue for accident or injury e.g. you were injured as a result of the other side’s negligence
If you make a claim for medical malpractice against a doctor or specialist
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If you have decided to enter into negotiation or mediation, either privately or at a court or tribunal, you will be asked to sign terms which require you to keep everything about your matter confidential before you begin. The practice was formerly that this confidentiality would last only for the duration of the negotiation or mediation. Today, this is usually substituted for a permanent confidentiality requirement which extends past the date of the negotiation or mediation and forever.
Similarly before a workplace investigation, the terms that used to be limited to the duration of the investigation have now been substituted with a forever NDA. We have heard from many individuals who refuse to sign an NDA – rather than time-limited confidentiality – who have been unable as a result to participate in their own investigation – or the investigation simply doesn’t happen at all.
It is important to check for this detail before commencing negotiations, mediation or investigation. If it is not clear in what you are being asked to sign, ask or write in that the confidentiality undertaking shall end when the negotiations/ mediation/ investigation ends (what is said will still be inadmissible in court, this is a different term for a different reason, but you can speak about it outside that context).
HOW WILL I RECOGNISE AN NDA
An NDA clause will usually be part of a much longer agreement that you make to settle (resolve and end) a formal complaint or a legal claim, in your original contract of employment, a pre-hiring contract, or an agreement you sign to begin a negotiation/ mediation/ investigation about your situation. Sometimes it is in a “schedule” and sometimes in the main body of the agreement..
Remember an NDA is rarely described as such in an agreement. Because there is growing public awareness of the harm caused by NDAs, other “softer” words like “confidentiality” and “private” are sometimes used. But this is the same thing – it is silencing you.
The language of NDAs is “legalese” so often hard to follow but most NDAs are exactly the same. Here are some examples of the most common clauses that we hope will help you to recognize if you are being asked to sign an NDA.
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“The parties confirm that they agree to keep the existence and terms of this Agreement and the circumstances concerning (X) confidential….”
• This means that you agree not to speak about anything related to your experience, to anyone, forever.
• It means that even saying you have signed an NDA is a breach
• We are also increasingly seeing a briefer version with the word “circumstances” omitted ie
“The parties confirm that they agree to keep the existence and terms of this Agreement confidential….”
Better? Not really. This still places you under restrictions on how much of your story you can tell. In effect, you cannot speak about the outcome where there has been a settlement. It is unclear how far this reaches back into your “circumstances” or experience but in practice, signers say that if they begin to tell their story they will quickly be asked questions they cannot answer, such as “did they make a deal with you?” . If you are faced with an NDA using this wording and are told “so you can still talk about your experience” be very skeptical. It is extremely difficult to know where the lines will be drawn and in practice, signers are still silenced.
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This is a term that forbids you from making any negative comments that will affect the reputation of the other side, commonly known as a non-disparagement clause
For example,
“The Employee shall not make any adverse or derogatory comment about the Employer or their officers, employees or workers and the Employee shall not do anything which shall, or may, bring the Employer or their officers, employees or workers into disrepute.”
Non-disparagement clauses go much further than the legal duty not to defame another person by saying something untruthful about them. A non-disparagement clause forbids you from making any kind of negative comment (whether it is true or not) that might damage the reputation of the other side. This is a subjective measure determined by the party arguing you have broken the term, so it means that you cannot say anything critical at all, regardless of its truth.
These highly damaging clauses are included within the legal definition of NDA in all the Canadian legislation and most of the Acts passed now in the US.
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• It is clear and undisputed in law that you cannot be prevented from reporting a possible crime to police. If you have signed an NDA you still always have the right to report to police.
* It is also clear that an NDA cannot prevent you from making a “protected disclosure” (see above, Thinking of Signing: You May Be Making a Protected Disclosure)
• There is a legal exception for the purposes of reporting your compensation to tax authorities.
• Many NDAs add a general exception to the NDA banning speaking that says “unless required to do so by law”; for example, being called to testify in court
• Some NDAs write in explicit exceptions to the gag, for example,
• your spouse or your family (but not usually your work colleagues or friends)
• a professional counsellor
• a medical professional
• a lawyer whom you may consult on the agreement
• a financial advisor
• your insurer
These exceptions may require that assume any legal obligation if that excepted person breaks confidentiality. This can be very intimidating and reduce the value of such exceptions.
On the employer’s side, other exceptions may be written in, for example,
“those required to implement the items listed above …”
• you can also to negotiate for a fixed term, for example 1 year or 2 years, for the NDA rather than an indefinite obligation
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Other terms that might be in your NDA that we have seen include:
• A term that forbids you from “encouraging or cooperating with” others with a similar complaint against the same individual or organization. For example, talking to a colleague about their own complaint against the same person you complained about or participating in a future complaint or lawsuit:
“Employee further agrees not to aid, assist or encourage any person asserting claims against the Company…Employee may state only ‘I can’t talk about it’.”
• You may see a term making you subject to an additional fixed penalty for every breach, and/or the recovery of any compensation you have been paid under the settlement agreement:
“A breach of this confidentiality paragraph will be deemed to be a material breach of the Agreement and will entitle Company to recover liquidated damages in the amount of $20,000 for each occurrence of breach.”
We also commonly see penalties for posting on social media; for example, a penalty clause of $500 for each Facebook post in breach of the NDA
• A term forbidding you from posting anything about the dispute or the agreement on social media:
“Employee acknowledges that this paragraph prohibits Employee from emailing about or posting any information about Employee’s allegations on any social media networking site including…..”
• A term stating that the employer will remove any complaints or discipline or reports of investigation procedures from the personnel file of the person whom you are complaining about. This means there will be no record for the future.
“The (organization) shall remove all records of complaints or discipline issued to …. and material related thereto from (X’s) personnel file.”
FAQ's
PART ONE : THE USE OF NDAs
Q: Aren’t NDAs supposed to protect commercially sensitive materials, intellectual property and research/ innovation which is the property of the organisation/ company?
A: Yes. NDAs were originally developed for this purpose in the 1980’s during the tech boom in California, to prevent former employees taking unprotected/ in development innovations and commercially valuable information with them when they moved to competitors. Our proposals will not change this, but instead stop the extension of NDAs to cover up misconduct, fraud and even crime.
NDAs are also be used to protect client confidentiality and personal client information and this is not a use we are challenging. Our focus is on the cover-up of misconduct.
Q: How are NDAs being used now?
A: It is estimated by many lawyers that 95% of civil settlements now include an NDA. In addition NDAs are used in most settlement agreements following a workplace grievance for discrimination, harassment or sexual misconduct (unless your union is pushing back; see Union Pledge). . Examples include not only settlement of sexual assault, harassment, discrimination and other human rights abuses but also agreements to raise the price of a new house; agreements to drop medical malpractice lawsuits; settlement of lawsuits over negligent investment advice; settlement following a worker’s complaint about a pattern of neglect in a care home; settlement of insurance claims involving building construction defects; and even agreements binding municipal councillors to secrecy over the arrival in town of an unpopular company or developer (a growing problem).
Q: How would the legislation proposed by Can't Buy My Silence change this?
A: The legislation that CBMS first developed in Ireland restricts the use of NDAs in discrimination, harassment and abuse cases in the workplace and in other settings including universities and also in private disputes between individuals/ organizations. It does this by setting a series of mandatory conditions for a legal NDA. These conditions originally included that a request for an NDA must come from the victim and not the employer or other side (“complainant’s preference”), they must have had independent legal advice setting out alternative means to protect victim confidentiality other than an NDA, the NDA must be of a fixed and limited duration, there must be no pressure or coercion to sign and the NDA must not harm the public interest or a third party.
With support for the principle of banning NDAs that cover up misconduct growing all the time, CBMS now recommends a straightforward ban ie legislation making NDAs in the prescribed areas (usually sexual misconduct/ abuse, discrimination and harassment) void and unenforceable. This is a simpler and clearer approach and avoids the risks of the conditions (above) being ignored or simply “signed away”. It is the approach taken by most US states including California, Texas, the US federal law, and now the UK.
Our new Model Bill is here (scroll down the page).
CBMS would ideally like to go further with restricting NDAs in other civil contexts as well (see the expanded list of possibilities here), but we see the Model Bill as an important first step. Other jurisdictions - for example the US, where 35 states have now legislated (as of February 2026) - have already passed similar legislation focusing on sexual harassment, sexual assault, abuse and discrimination.
Q: But aren’t NDAs essential for settling cases?
A: Since the early 1980’s, civil cases have settled before a full hearing at a rate of approximately 90-95%. Clearly this has happened in most cases until comparatively recently without NDAs.
There are many incentives to settle a case on both sides, including cost and time. . It is important to understand that for employers/ institutional defendants/individual perpetrators in harassment, discrimination and abuse cases, another disincentive is that without settlement, a court or tribunal hearing is in the public domain and will reveal the information they want to keep hidden in the NDA. So they have the biggest incentive of all for settling!
A public hearing is an even worse outcome for an employer/ individual defendant than a settlement with no NDA - so you can push back!
CBMS has analyzed settlement data from the US federal Employment Equalities Opportunities Commission, which deals with complaints of discrimination and harassment for organizations with more than 15 employees. In 2017 there was no NDA legislation anywhere in the US. In the next two years, 5 states legislated to restrict the use of settlement NDAs in sexual harassment – California (2018), New Mexico (2018) New York (2018) New Jersey (2019), Maryland (2019) and Washington State (2018). In 2025, these 6 states constitute approximately 23% of the total US population. These 6 states constituted 15% of the nationwide EEOC sexual harassment claims in 2019 (and represent approx. 23% of the total US population).
National settlement numbers from 2017 are compared with settlements in 2019 (https://www.eeoc.gov/sites/default/files/2020-06/Sexual%20Harassment%20Infographic_052220.pdf)
· In 2017, 83.1% of sexual harassment claims made to the EEOC were settled
· In 2019, once these 6 states had passed legislation forbidding NDAs for sexual harassment, 92.4% of sexual harassment claims made to the EEOC were settled
In summary, after NDA legislation in these 6 states, the settlement rate at the EEOC for sexual harassment cases rose by over 9%.
By the end of 2024, 22 US states had passed legislation restricting NDAs for sexual harassment. While EEOC has changed its method of reporting in the last 12 months, the % of cases resolved via a positive outcome for the claimant (merit resolutions, successful conciliations and withdrawals with benefits) for sexual harassment claims has not changed significantly or even marginally over the last five years (see Table E2c).
In the sole jurisdiction in Canada to have passed NDA legislation, Prince Edward Island, the settlement rate has not changed.
Q: But don’t victims want confidentiality?
A: Yes! But this can be simply achieved in a one-sided confidentiality clause that protects the victim. Instead, NDAs require the victim to promise confidentiality to the other side (the employer/ organisation and/or the perpetrator) in exchange for their own confidentiality.
This doesn't need to be mutual. In your negotiation, certain issues may be more important to you and others to the employer/ perpetrator. There are always “trade-offs” with different conditions on each side. So you can ask for a one-sided confidentiality guarantee that protects you and not the perpetrator/ employer. This is how the criminal justice system works, with the names of sexual offence complainants protected but not the name of the defendant.
See our example of a one-sided confidentiality agreement here
Q: Don’t victims lever their right to speak out for more money?
A: It is important to remember that settlements for workplace harassment and discrimination are not large - and the monetary compensation paid is redress for their experience, not for staying silent. For example, a survey of 542 UK women who had signed an NDA for pregnancy and maternity discrimination conducted by Pregnant Then Screwed found that almost 20% received a settlement of less than 5K (Pregnant Then Screwed, 2022). The Center for Employment Equity analysed U.S Equal Employment Opportunity Commission and state Fair Employment Practices Agencies (2012 – 2016) and found that complainants receiving monetary compensation for being sexually harassed at work were awarded an average of $24,700 and half received less than $10,000.
The argument that including an NDA leads to multi-million settlements for victims is factually untrue, and is only ever made by lawyers with “celebrity” clients.
There is also US data (from the Employment Equality Opportunity Commission) suggesting that the level of monetary compensation for sexual harassment has risen significantly - by $22 million, well above the level of inflation, from 2017 to 2019. Again this suggests that fears that complainants would receive less money if they could not be paid for silence are unfounded.
Far from levering the negotiations to get more money, the vast majority of the individuals CBMS hears from who have signed an NDA did not understand all its implications at the time they signed. They often do so under a great deal of pressure from the other side (and sometimes their own lawyer or union representative).
Moreover, an NDA can hide under-compensation for statutory entitlements such as severance and vacation pay. In our experience, this is the far bigger problem.
Q: Is this an equity issue?
A: There is lots of evidence now that women, minorities, and disabled people sign NDAs at a higher rate than white able employees and others. 4 research studies (including CBMS/ Speak Out Revolution data) now show that one in three workers has signed some form of NDA. However studies also show a differential impact on more vulnerable groups. First, employees in low-income sectors with high turnover (eg hospitality and accommodations, retail sector) are more likely to experience sexual harassment and other forms of workplace mistreatment and this is reflected in current CBMS / Speak Out Revolution data showing that 50% of sales staff and 42% of retail staff report report signing NDAs. CBMS / Speak Out Revolution data also consistently shows Black and Brown people signing NDAs at higher rates than their White counterparts. Our data also shows much higher (more than x5) rates of women than men reporting discrimination and harassment and 42% reporting that they have signed an NDA or “can’t say for legal reasons” (which we count as having signed an NDA). 39% of the much smaller sampler of men report signing or “can’t say for legal reasons”.
PART TWO: YOUR AGREEMENT
Q: My lawyer says that I should sign this agreement immediately: can I ask for time to think about it?
A: You should ask for as much time as you need. Time pressure is artificial, and a common tactic. You probably want to discuss the proposed agreement with at least one other person, maybe more. If you have not yet signed an NDA to make the negotiations confidential (see above) you can speak to anyone you wish. If you have signed something to restrict what you can say about the negotiations, ask for named individuals to be designated as an exception to this.
Q: The agreement says only that the amount of compensation paid to me is confidential - is that normal?
A: This is a very common term in a settlement agreement. You may be willing to accept confidentially about the amount of compensation (or not). The legislation restricting NDAs in PEI (and most US states) makes a specific exception for settlement amount.
What you should be looking out for in addition are confidentiality restrictions that go further than this; for example, the structure of the settlement (how much is described as “damages” which are tax-free to the victim and how much “severance” which is taxable; see below); the circumstances that led to your complaint, your personal experiences, the preceding negotiations. You should also be looking out for a non-disparagement clause (see also Recognizing and Understanding an NDA)
Q: I have a clause in my agreement that reads: “The terms and conditions of this Memorandum of Agreement shall remain strictly confidential between the parties and shall not be disclosed to anyone.” I'm not sure if this means that I still can talk about my complaint but just not the settlement?
A: This is common wording and it is intentionally unclear and vague. It is likely that the other side wants you to understand this as meaning you cannot talk about your complaint . In practice you are still constrained from using your voice; it is difficult if not impossible in practice to describe your experience without being able to refer to the resolution or even the fact of a settlement.
In practice, individuals find that it is extremely hard to speak about your experience without referring to the settlement itself. The outcome is obviously part of your story of your personal experiences.
This may be something you want to ask the lawyer on the other side, or if you have your own lawyer, ask them to clarify.
CBMS treats these clauses as NDAs because they restrict talking about the experience, beyond simply the monetary amount of the settlement (see above).
Q: Does this mean I can’t even say that we made an agreement?
A: Yes, this is often interpreted as preventing you from even saying you reached a settlement even though this may be public knowledge. Many people who sign NDAs are told by their lawyers to deal with this by saying “I’m not allowed to talk about that.” So this is clearly a restraint on speaking honestly and transparently about what happened.
A recent Canadian decision decided that updating a LinkedIn profile to read that a sex discrimination complaint “has been resolved” was a breach of the NDA signed on settlement.
Q: Is my NDA even going to be enforced by the court? Surely it is obviously unfair and I signed without fully understanding and under pressure?
A: Breach of the NDA (or any other term, including a non-disparagement clause) means breach of the contract, and in theory gives the employer the right to seek the return of your compensation.
However many if not most NDA clauses may not be enforceable by a court - in other words, they may not be legal - where they is pressure to sign and/or a lack of clear understanding. Recent decisions in the US have struck down NDAs as unenforceable where they were not properly consented to, or because they are simply too vague and unreasonable. Cases in Canada are as yet less clear about the legality of an NDA so there is uncertainty.
You can read a review of Canadian caselaw here.
This uncertainty is another reason why we need new laws to ban NDAs for covering up misconduct.
Q: In my final agreement, the damages I received for the harm I suffered are presented as severance pay or employment income, not compensation. This has tax and unemployment benefit / EI implications, because if they are seen as severance I have to pay taxes on them. Is that right?
A: No! Damages that compensate you for the harm you have suffered should not be taxed. This rule is the same in Canada and the UK. Only payments that represent severance as taxable income.
This was established in a case brought by an NDA signatory in Canada to the Social Security Appeals Tribunal. If the payment made to silence you is reported as employment income, or as severance, you will pay taxes. In a case brought by an NDA signatory in Canada to the Social Security Appeals Tribunal, a payment that is for reasons other than employment income should not be treated as income. This case has established the ‘intent’ of the payment has to be established when questioning whether or not there should be tax or benefit/EI implications.
You can read the decision here
Q: My settlement agreement says that I must release the other party from all legal liability and waive my right to bring a claim on this issue in the future. Is this an NDA?
A: No. This is a standard "release" clause, which is a required part of every settlement (to end the legal claim) and is not an NDA. This blog usefully explains the difference so you can be clear about this. An NDA is NOT a required part of a settlement agreement.