Supporting Market Accountability, Workplace Equity, and Fair Competition by Reining in Non-Disclosure Agreements

Abstract

Overuse of non-disclosure agreements (NDAs) is a pervasive problem in the United States. Companies apply these silencing tools to prevent their workers from sharing critical information with one another and the public. This in turn threatens economic growth, limits competition, and inhibits workplace equity. Workers need reliable information about corporate practices to assess job quality, ensure personal safety, and obtain pay commensurate with their worth. The public needs information about corporate practices to decide how to use their investment and purchasing power. Yet existing laws give companies enormous latitude to designate information as confidential, allowing them to impose NDAs and other contract clauses and internal policies that prevent workers from sharing information with those who need to know.

It is time for government to rein in corporate secrecy. The #MeToo movement revealed how NDAs enable and perpetuate misconduct at work, prompting public outrage and support for legislative action. New empirical evidence has exposed just how widely NDAs are being used in the corporate world: researchers estimate that between 33% and 57% of U.S. workers are constrained by an NDA or similar mechanism. At recent hearings and public events, regulators have signaled their concern about the anti-competitive effects of restrictive employment agreements. Policymakers should seize this moment of support to pursue a comprehensive legislative and multi-agency agenda limiting inappropriate use of NDAs. A strong action plan should include proactive enforcement of existing laws governing NDAs; new legislation prohibiting the most harmful uses of NDAs; and interagency collaboration to educate the public, collect data, and support research on impacts of corporate secrecy practices. Together, these efforts to limit NDA abuse will promote market accountability, workplace equity, and fair competition.

Keywords: Non-Disclosure Agreements, Secrecy

JEL Classification: M55, K31, J58