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California bill could limit NDAs

On Behalf of | Mar 9, 2021 | Business Law And Litigation |

Businesses take steps to ensure their operations and the longevity of the company is protected. Whether it is business contracts or employment contracts, these documents outline the parameters of agreements between the business and another party. Thus, if any issues arise because of these contracts, this could evolve into a business litigation situation. Therefore, it is important for businesses to understand how to address these matters and how the changing laws in California and elsewhere could impact them.

Nondisclosure agreements

After being quiet for over a year, a former employee of the social media company Pinterest is speaking out about her departure from the company. Much like employees at major tech firms, she signed a nondisclosure agreement or NDA when she was hired. This document legally barred her from speaking out about essentially anything that occurred at the company, which also included discrimination and harassment.

She stated that if Pinterest sued her for breaking the NDA, she would go bankrupt. However, as the Black Lives Matter movement emerged and the company announced its support, she decided it was time to speak out. While they initially insisted that she and another black colleague were treated fairly, Pinterest soon stated that parts of its culture were broken.

Issue with broad NDAs

The former employee stated that her NDA was written so broadly that it prevented her from even speaking to her spouse about what happened to her. She described it as a gag order that compounds the harm suffered because it didn’t allow her to explain why she left after experiencing discrimination and harassment and felt pushed out of her job.

A California bill, is passed, would stop the use of NDAs to serve as a means to cover illegal behavior at a corporation. This will not interfere with their intended purpose, such as protecting trade secrets; however, it will ensure that employees maintain the right to speak out against any form of discrimination experienced at his or her job.

Business litigation matters can be complex, especially when they involve legal disputes that could impact the company’s reputation and overall operations. Thus, it is imperative that businesses fully understand their rights and options when it comes to addressing these matters, whether it is making changing to comply with changes in current laws or resolve disputes involving an employee or a party to a business contract.


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