- 45% of workers surveyed said they had been subject to a non-disclosure agreement.
- 39% of workers said they were bound by mandatory arbitration, according to a Penn State survey.
- The agreements are not enforced equally: 27% of women said they were subject to non-competes, compared to 17% of men.
Nondisclosure agreements and binding arbitration have become rampant in the workplace, according to a new survey of job seekers. A second survey found that employees who sue in court receive higher payouts than those required to pursue claims through arbitration.
Research by Mark Gough, an assistant professor of labor and labor relations at Penn State University, exposes how widely companies have adopted mechanisms to silence employees and dictate the terms by which allegations of workplace misconduct are resolved. work.
For the study, which was to be released later today before the findings are submitted for peer review, Gough surveyed 947 job seekers in a wide range of U.S. industries during the summer and fall of 2024, asking respondents whether they were bound in their most recent employment contract by a variety of restrictive covenants, including NDAs, non-compete clauses and non-solicitation clauses.
In the study, “Contracts That Bind: Unraveling the Use of NDAs, Forced Arbitration, and Other Restrictive Agreements in the US Labor Market,” Gough found that nondisclosure agreements have become ubiquitous, with 45% of respondents they are required to sign them as a condition. of employment.
Mandatory arbitration has also become common, with 39% of respondents bound by it. Twenty-two percent said they had to sign non-competes.
Gough found that these arrangements were not uniformly imposed. Forty-eight percent of black respondents, for example, reported being asked to sign away their right to participate in a class action lawsuit, compared to 39% of white respondents. While 42% of white respondents said they were bound by NDAs, this ratio rose to 45% for black respondents and 53% for Asian respondents.
Women reported being coerced by non-competitors at a higher rate – 27%, compared to 17% for men. Women also reported signing NDAs at a slightly higher rate than men, 47% versus 43% for men.
Restrictive covenants were more often imposed on graduates than those without a degree. And some agreements — binding arbitration, class action waivers and NDAs — were much more common among respondents 50 and older.
“There’s a lot of silencing going on, and it’s felt unevenly across the workforce,” Gough told Business Insider. “Even as far as employers are concerned, these are not without cost. You are alienating your potential employees. Immediately, they think less of your firm. This has consequences, especially in a competitive job market.”
Survey respondents expressed particular concern about being required to sign non-compete agreements, binding arbitration agreements and NDAs.
While the widespread use of NDAs in the workplace is no secret, measuring the frequency and scope of the pacts has been difficult given the nature of the agreements. Many employees who previously shared copies of their NDAs with BI said they regretted agreeing to them and didn’t fully understand the restrictions they signed.
Originally, non-disclosure agreements were designed to protect confidential trade secrets. But over time, the language in these nondisclosure agreements has expanded to include nondisparagement clauses and restrictions on disclosure of alleged workplace misconduct. The use of NDAs to silence victims of harassment and discrimination, in particular, has been hotly debated for much of the past decade, with new laws passed at both the state and federal levels following the #MeToo movement that limit companies’ ability to enforce NDAs in those situations.
“These hush-hush deals have allowed much of corporate America to remain unsullied,” Gretchen Carlson, the former Fox News anchor, told BI. With political consultant Julie Roginsky, Carlson co-founded the nonprofit advocacy organization Lift Our Voices, which advised Gough on his research. The women helped lead efforts to pass the most prominent piece of federal legislation to limit the use of NDAs, the Speak Out Act of 2022, which bans the use of NDAs to lie to victims of sexual abuse and harassment.
For Gough’s second study, “Forced to Settle: The Unseen Costs of Arbitration Versus Litigation,” he surveyed 479 labor law attorneys about their experience pursuing claims in court and through private arbitration. That survey found that employee plaintiffs are much more likely to prevail in disputes that are settled in court and receive significantly larger payouts than those who go through arbitration.
“These findings raise critical questions about whether arbitration can truly serve as an effective alternative to litigation, particularly when it comes to providing equitable financial compensation,” Gough writes.
Roginsky told BI that the findings confirm her experience that harassment and discrimination claims forced into arbitration are usually resolved in favor of the company and leave the employee no opportunity to appeal.
“The arbitrator knows they can come back for more business with the company; it’s in their best interest to rule in the company’s favor,” Roginsky said. When it comes to filing a claim, she said, “If you have a forced arbitration clause, what does it matter?”
In 2021, BI published a series of stories examining the placement of NDAs and nondisclosure agreements at Silicon Valley tech companies, based on a review of data shared by employees. Since then, many employees have come forward to break their NDAs and speak out about sexual harassment and discrimination, sparking debate over the misuse of whistleblower agreements and prompting Apple executives to pledge in 2022 to limited how the company uses NDAs moving forward. .
Matt Drange is a reporter on Business Insider’s investigative desk. He has frequently covered workplace misconduct cases involving NDAs. Got a story tip? Be sure to contact Matt.