Abuses Hide in the Silence of Nondisparagement Agreements

Abuses Hide in the Silence of Nondisparagement Agreements

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Nondisparagement clauses are not limited to legal settlements. They are increasingly found in standard employment contracts in many industries, sometimes in a simple offer letter that helps to create a blanket of silence around a company. Their use has become particularly widespread in tech employment contracts, from venture investment firms and start-ups to the biggest companies in Silicon Valley, including Google.

Babak Nivi, left, a founder and board member of AngelList, in 2011 with his fellow co-founder, Naval Ravikant. Mr. Nivi has no role at the company and is no longer a board member, AngelList said, but it would not say when or why he left the board.

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Jim Wilson/The New York Times

Google declined to comment on its use of nondisparagement agreements.

Nondisparagement clauses have become so common that the Equal Employment Opportunity Commission, which enforces federal discrimination laws, and the National Labor Relations Board, a federal agency that protects workers’ rights, have been studying whether they are having a chilling effect on workers speaking up about wrongdoing or filing lawsuits, said Orly Lobel, a law professor at the University of San Diego.

Employees increasingly “have to give up their constitutional right to speak freely about their experiences if they want to be part of the work force,” said Nancy E. Smith, a partner at the law firm Smith Mullin. “The silence sends a message: Men’s jobs are more important than women’s lives.”

At Binary Capital, a venture capital firm in San Francisco that collapsed last month under the weight of multiple allegations of sexual harassment, new hires signed an employment contract that included the clause that “employee shall not disparage the company,” according to a contract quoted in a lawsuit filed against the firm last month.

Ann Lai, a former employee, said in her lawsuit filed in San Mateo Superior Court in California that she had complained to her bosses about sexism, discrimination and inappropriate behavior in the workplace, and that Binary used the nondisparagement provision in her employment contract to threaten her and prevent her from talking about why she had quit her job.

The nondisparagement clause made it “hard for employees to ‘speak up’ about inappropriate or illegal conduct,” the suit said, adding, “Employees are instead led to believe that it is illegal to do so, and that disclosing information about their working conditions will lead to ruinous litigation.”

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Ann Lai’s Lawsuit Against Binary Capital

Ms. Lai, a former employee of Binary, contends that after she complained to her bosses about sexism and inappropriate behavior in the workplace, the company used the non-disparagement provision in her employment contract to threaten her and prevent her from talking about why she had quit her job.



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The founders of Binary Capital, Justin Caldbeck and Jonathan Teo, did not respond to a request for comment on their firm’s employee contract clause. Chris Baker, an employment lawyer at the law firm Baker Curtis & Schwartz who represents Ms. Lai and has sued Google over broad nondisclosure provisions, declined to comment specifically on Ms. Lai’s case.

When Mr. Caldbeck worked at Lightspeed Venture Partners, he attended board meetings at the e-commerce company Stitch Fix, on behalf of the firm. After Lightspeed was informed that Mr. Caldbeck had made Katrina Lake, the Stitch Fix chief executive, uncomfortable, Mr. Caldbeck was removed from his role on the board, according to three people with knowledge of the matter. Spokeswomen for Ms. Lake and Lightspeed declined to comment.

The company and Ms. Lake signed a mutual nondisparagement agreement in 2013, according to a copy of the agreement obtained by the news site Axios.

Mr. Caldbeck left Lightspeed the next year, but the reason he was removed from Ms. Lake’s board was not made public.

At Binary, in text messages reviewed by The New York Times, he requested evening meetings with an entrepreneur named Lindsay Meyer, asked if she was attracted to him, and if she would accompany him on overnight trips. He also questioned why she would rather be with her boyfriend than with him.

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