By Marisa Kendall
The Mercury News
WWR Article Summary (tl;dr) Tech workers often sign nondisclosure agreements promising not to reveal trade secrets, but in addition to those standard NDAs, some lawyers say Bay Area companies also are using non-disparagement clauses to gag employees who experience harassment.
SAN JOSE, Calif.
Even as Silicon Valley applauds the bravery of more than a dozen women who have come forward to report sexual harassment in recent weeks, some tech companies and venture capital firms muzzle their own employees with policies that prevent them from speaking out.
Tech workers often sign nondisclosure agreements promising not to reveal trade secrets, but in addition to those standard NDAs, some lawyers say Bay Area companies also are using non-disparagement clauses to gag employees who experience harassment.
Add that to the reluctance of many women to speak up for fear of reprisals, and experts say the vast majority of sexual harassment stays in the shadows, making meaningful change difficult.
“Those types of clauses can prevent people from coming forward and end up covering up sexual harassment,” said Maya Raghu, director of workplace equality for the National Women’s Law Center in Washington, D.C. “And in many cases cover up serial harassment and serial harassers within a company or within an industry. … It’s a huge problem.”
Workers often sign non-disparagement agreements when they leave a company, after they report inappropriate behavior internally, or sometimes even at the start of their employment.
The provisions are particularly common in severance agreements, Uber, Facebook and others have them, and in binding settlements, but they can’t prohibit a worker from reporting harassment to the Equal Employment Opportunity Commission or in response to a subpoena.
The agreements work both ways, lawyers say, shielding individual workers from negative comments that could hurt their future employment prospects, and from the embarrassment and trauma of reliving a painful incident.
Companies including Google and Tesla have been accused of using their confidentiality agreements to stifle employee speech. Google is fighting claims before the National Labor Relations Board that the company illegally prevented employees from discussing their wages and working conditions. A lawsuit filed in San Francisco County Superior Court made the same argument.
“The policies prohibit Googlers from speaking plainly, even internally, about illegal conduct or dangerous product defects,” lawyers for Google employees wrote in that case, which recently was largely shelved out of deference to the labor relations case.
Many companies also ask workers to waive their right to go to court over employment issues, including sexual harassment, instead steering them into private arbitration where the claims and their outcome may never be made public.
More than half of companies surveyed last year had arbitration clauses in their contracts, according to a study by law firm Carlton Fields Jorden Burt, and local tech companies including Uber, Google and Oracle have used them in employee agreements.
It’s not just tech, when former Fox News anchor Gretchen Carlson sued chairman Roger Ailes last year for sexual harassment, Ailes used her arbitration agreement with Fox to try to push the litigation out of the spotlight. The case ultimately settled for $20 million.
Experts say those factors mean the slew of women who have come forward recently to accuse big names including “Shark Tank” investor Chris Sacca and 500 Startups CEO Dave McClure are just the tip of the iceberg.
While nearly two in three women in tech have been sexually harassed at work, according to The Elephant in the Valley, a 2015 survey of more than 200 women in tech conducted by venture capitalist Trae Vassallo and others, 39 percent did nothing because they thought it would negatively impact their career, 30 percent didn’t report it because they wanted to forget, and 29 percent signed non-disparagement agreements.
“By and large this stuff is buried,” said San Francisco-based employment attorney Kelly Dermody. More than half the sexual harassment claims that cross her desk are never made public.
A non-disparagement agreement appears to have silenced San Francisco-based Stitch Fix founder Katrina Lake after she reported being sexually harassed by investor Justin Caldbeck, years before he was publicly accused of harassing multiple other women and forced to resign from Binary Capital.
When Lake complained to Lightspeed Ventures Partners, where Caldbeck worked at the time, the firm asked her to sign a non-disparagement agreement, quietly removed Caldbeck from his position as a Stitch Fix board observer, and effectively swept Lake’s claim under the rug, tech, media and political news website Axios reported.
When the situation came to light last month, Lightspeed, without naming Lake or Stitch Fix, tweeted that it regretted not taking stronger action.
Caldbeck left Lightspeed and founded Binary Capital in 2014, where, according to a lawsuit filed late last month, he tried to prevent an employee from speaking about a “sexist and sexual” workplace atmosphere.
Ann Lai, a former principal at Binary, says the firm required her to sign a non-disparagement agreement when she started. Lai’s lawyers claim that when she resigned in May 2016, Caldbeck threatened legal action if she spoke about the alleged inappropriate behavior.
He even pressured her to delete a Facebook post she published about her decision to quit, according to the lawsuit, which names Caldbeck and Binary as defendants.
More than a year later, six women publicly accused Caldbeck of sexual harassment, leading him to resign last month.
Caldbeck, who last week said he was traveling, did not immediately comment on the lawsuit. His co-founder, Jonathan Teo, did not respond to a message seeking comment.
It’s not the norm for a company to pre-emptively silence workers by sticking non-disparagement clauses in employment agreements, but it’s becoming more common, said Silicon Valley employment attorney Sonya Smallets.
She credits the rise of blogging and social media. These days, one online accusation of sexual harassment can have massive ramifications for a company, take former Uber engineer Susan Fowler Rigetti, whose blog post sparked a chain reaction that ultimately led to the ouster of CEO Travis Kalanick.
“Employers are concerned about things that are said on social media that they believe to be fundamentally untrue or unfair,” said Rico Rosales, a Palo Alto-based lawyer who represents companies in employment matters.
Nevertheless, employers rarely actually flex that legal muscle, he said. Rosales has never filed a claim against a worker who violated a non-disparagement clause with an online post, and in his experience, he said, those clauses don’t prevent workers from exercising their rights to speak about workplace conditions.
If the tech industry is going to fix its sexual harassment problem, women need to continue to speak up, said entrepreneur Taran Ghatrora, whose feminine hygiene company ElleBox is part of startup accelerator 500 Startups’ current Mountain View cohort.
“If we don’t talk about it,” she said, “it will keep happening.”
