Settlement & Resolution· 11 min read

NDAs and Non-Disparagement Clauses: What You Can and Can't Waive in a Settlement

Settlement agreements in employment cases almost always include confidentiality and non-disparagement provisions. Workers sign them without fully understanding what they prohibit, how long they last, and — critically — what they cannot cover even when the language says otherwise. Some of what appears in these agreements is unenforceable as a matter of federal and state law. Some of it is very much enforceable and carries real consequences for violation.

What Confidentiality Provisions Typically Cover

A confidentiality clause in a settlement agreement generally prohibits the worker from disclosing: the amount of the settlement; the fact that a settlement was reached; and sometimes the underlying facts of the dispute. Non-disparagement clauses prohibit the worker from making negative statements about the employer, its officers, its products, or the events that led to the dispute. These provisions are typically one-sided. The employer doesn't promise confidentiality; the worker does. Courts have generally enforced them in the employment context, subject to state law limitations.

What Federal Law Prohibits Waiving

Certain rights cannot be waived even in a signed, negotiated settlement agreement. Workers cannot waive the right to file a charge with the EEOC or participate in an EEOC investigation or proceeding. A confidentiality clause that prohibits a worker from filing an EEOC charge is unenforceable as a matter of federal law — the EEOC has made clear it will not be constrained by private agreements. Workers can be prohibited from recovering individual monetary damages (if the release is valid), but they cannot be prohibited from filing or cooperating. Workers also generally cannot be prevented from making truthful statements to law enforcement or government agencies. Clauses that prohibit cooperation with government investigations are routinely held unenforceable.

What State Law Has Changed

A growing number of states have enacted laws restricting the scope of confidentiality and non-disparagement provisions in harassment and discrimination settlements. California's SB 820 prohibits provisions that prevent disclosure of facts related to sexual harassment, sexual assault, and discrimination. New York's Human Rights Law similarly limits NDAs in harassment and discrimination cases. Washington, Illinois, and New Jersey have enacted comparable restrictions. In these states, even a signed agreement cannot bar the worker from talking about what happened. Workers in these states who were pressured into broad confidentiality agreements covering discrimination or harassment should consult an attorney about whether those provisions are enforceable.

Non-Disparagement and Its Limits

Non-disparagement clauses are generally enforceable against the worker. A worker who posts publicly about their former employer in violation of a non-disparagement clause can face a lawsuit for breach of contract. Courts have enforced these clauses and awarded damages for violations. Before signing, workers should assess whether the non-disparagement clause is mutual (does the employer also agree not to disparage the worker?), whether it covers future truthful statements to prospective employers, and whether violations carry liquidated damages provisions that specify a dollar amount per violation. These details are negotiable.

Key takeaways

What Confidentiality Provisions Typically Cover
What Federal Law Prohibits Waiving
What State Law Has Changed
Non-Disparagement and Its Limits

Citations

EEOC, "What You Should Know: EEOC and Non-Disclosure Agreements" — Cited authority
CA SB 820, codified at CCP § 1001 — Cited authority
NY Executive Law § 297(9)(b) — Cited authority
Title VII, 42 U.S.C. § 2000e-5(f) — Cited authority

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