How to use NDAs without getting burned

When the Vancouver Symphony Orchestra (VSO) threatened legal action against a former violinist who broke a non-disclosure agreement (NDA) to talk about alleged sexual assault, the story eventually made headlines.

The orchestra has now pledged to largely abandon NDAs in cases involving sexual misconduct unless a complainant specifically wants one.

But two employment lawyers speaking to Canadian HR Reporter say that doesn’t mean confidentiality clauses are dead — just that employers need to be more strategic, transparent and careful in how they are drafted and used.

Why employers still want NDAs

For many organizations, the instinct to reach for an NDA in any settlement is still strong, says Lisa Goodfellow, partner at Miller Thomson in Toronto.

“It’s ironic,” she says. “The reason employers want NDAs or confidentiality obligations in the settlements is to avoid bad publicity. And, frankly, one of the things that complainants or plaintiffs’ counsel use in order to get settlements for the clients is the risk of bad publicity or reputational risk for employers.”

And, if it’s important for the complainant to tell the world about what happened, they don’t have to enter into a settlement, says Goodfellow.

“It’s not being forced upon them. It’s in exchange for the payment that they’re receiving. They’re always free to pursue their case at a tribunal level if they really want to tell their story.”

It’s important to remember why settlements are used, she says: “We’re always talking about a situation where there hasn’t been a judicial finding yet as to whether anything inappropriate really happened or not.”

That’s a big reason why most employers will not settle without some confidentiality language, she says, adding that confidentiality provisions are used in all kinds of agreements, such as tenant-landlord contracts.

“It’s just whenever someone is settling something without admitting that they did something wrong, then they’re going to want confidentiality because of this tendency for less sophisticated people to assume that means you did something wrong.”

The costs of litigation

Another reason why NDAs persist is that litigation can be gruelling, whether it’s before a human rights tribunal, a court or grievance arbitration — especially for the complainant, says Goodfellow.

“They have to give their evidence in public, in front of people. They have to talk about it; they have to relive their experience; they have to get cross‑examined by opposing counsel. It’s not fun for them.”

Delays add to the strain, she says, citing four- to five-year timelines for a human rights tribunal hearing after someone files a complaint.

Litigation can also be very costly for employers, says Goodfellow.

“A lot of people think, ‘Oh, if they paid money, it must be true because otherwise why would they pay the money?’ Well, in reality, they pay the money because the legal defense costs are high, people like me are expensive; it takes time and energy, [plus] management and your witnesses and everything else to go to a full hearing.”

As a result, it’s “really a good thing” for these kinds of cases to be resolved, she says, “whether they had merit or not.”

Confidentiality cuts both ways

Goodfellow also points out that while most people consider the complainant and the importance of protecting their identity, respondents are often forgotten.

“They’re not all guilty; there’s some respondents who are unfairly accused and they deserve some confidentiality in the process,” she says.

“And then also witnesses… it’s really important to protect the confidentiality of witnesses as much as possible in order to ensure that people feel comfortable being witnesses, giving their honest evidence. And so that they’re not subject to any kind of reprisal for participating in an investigation.”

That’s why confidentiality works for both sides with NDAs, says Goodfellow.

“If you have an employee or a former employee, if they’re just free to tell their side of the story… it’s kind of unbalanced because the employer is never going to talk about it… they can’t. They have obligations under the health and safety legislation and common law in some provinces, statutory privacy legislation that prevents them from being able to talk about it. So, it’s kind of unfair to an employer in a case like that.”

Repeat offenders and ‘toxic secrecy’

Beyond individual disputes, critics argue that NDAs can hide patterns of misconduct and enable serial perpetrators to continue offending in new workplaces.

If it makes the news, “that could create a real problem” for employers, says Rose Keith, partner at Harper Grey in Vancouver. “Maybe he’s kind of at the top of your food chain… and for whatever reason, you decided to keep him.”

NDAs can get people incensed when they come up in cases like that involving Hockey Canada with allegations of repeat offenders, says Goodfellow. But there are already obligations on employers to take steps to prevent anything like that happening and, if it does, to make sure it doesn’t happen again.

“It's not like they're just paying people off — that shouldn't be happening… the human rights legislation and the occupational health and safety legislation requires employers to take every precaution reasonable in the circumstance to protect the health and safety of their employees,” she says.

“So, if it's serious misconduct, [employers are] almost always going to be terminating the offender. And if it's something less, they're going to be reading them the riot act, giving them last-chance warning letters, making them undergo training and all those sorts of things to prevent it from happening.”

NDAs and regulatory requirements

Keith says another challenge is how NDAs intersect with regulatory duties.

“In an employment context, there’s often regulatory overlay,” she says. “If you’re the victim of sexual harassment, that falls within the purview of WorkSafe[BC]. So, to enter into an NDA that prohibits you from making a regulatory complaint would be improper and would be frowned upon — just like entering into an NDA that prevented you from being able to report a crime.”

Keith warns that employers may run afoul of regulatory schemes if they just have “a blanket non-disclosure.” Instead, she says, clauses must be re‑engineered to make clear that statutory routes — such as occupational health and safety complaints, human rights claims and police reports — remain open.

Regulators and legislators are increasingly pushing for boundaries around what NDAs can and cannot do.

In Prince Edward Island, for example, the Non‑Disclosure Agreements Act limits NDAs in discrimination and harassment settlements to situations where confidentiality is “the expressed wish and preference of the relevant person concerned” in looking to “regulate the content and use of non-disclosure agreements.”

Using NDAs: Are they always needed?

Keith says the era of boilerplate NDAs is over, especially in sexual harassment and discrimination matters. With the #MeToo movement, everyone started looking at these things a little more critically, she says.

“I think the public view on it has shifted. And I think the courts are looking at it a lot more critically.”

Keith draws a parallel to restrictive covenants such as non-competes.

“We probably need to really examine that provision of a release. Just like if you’re doing a non-competition clause, you really have to be thoughtful about it and think, ‘What actually am I trying to protect?’ Because if it’s overly broad and overly general, it’s not going to be enforceable.

“It has to be really tailored to the situation. And I think NDAs now are the same.”

Using an NDA: avoiding pressure tactics

A central concern in the public debate — highlighted by the VSO case — is whether workers are pressured into NDAs because the immediate payout feels more realistic than a multi‑year legal fight.

Goodfellow acknowledges there can be real economic pressure, for anyone, which is why employers should build safeguards into their process.

“It’s always important for employers to ensure that an employee has time to go away and think about an offer. Never make anybody sign anything on the spot — make sure they have time to get independent legal advice before they sign anything.

“Usually, I tell our clients: ‘Even if the person wants to sign right on the spot, don’t let them, unless they’ve got a lawyer.’”

Keith agrees that legal counsel should be guarded if the complainant is unrepresented.

“If they don’t have counsel, you’ve got to be super careful… you really want to ensure that there's independent legal advice and, depending on the circumstances, you might even want to fund that independent legal advice,” she says, adding that plain language instead of legalese in the agreement is also preferred.

“And maybe [employers] do things like just make it for a limited duration. What protection do you really need from the disclosure? It probably isn’t a lifetime… so maybe you limit the duration of it.”

Using an NDA: Allowing for exceptions

Even where confidentiality is appropriate, lawyers say there should be room for complainants to seek support. Goodfellow notes that earlier proposals around NDAs in Ontario contemplated express exceptions — and that may become more common in the agreements.

“One thing that they were planning to do in the proposed legislation was to carve out that the person, that the complainant, was able to speak about their experiences to their doctor, their therapist, people like that. And I think that’s a very reasonable request.”

P.E.I.’s statute explicitly permits disclosure to categories such as medical professionals, counsellors and others, and even allows “artistic expression” that does not identify the perpetrator or reveal settlement terms.

Keith says she has seen creative solutions when complainants want to speak more broadly.

“I had a client once that wanted to write about her experience. And… the NDA that we entered into in that case allowed her to write about her experience, but there was privacy around names,” she says.

“A lot of the time, it’s not like everyone agrees about what happened — there’s varying shades of it. So, you’re dancing around assignation all the time anyway.”

However, Goodfellow cautions against using anonymity in NDAs, citing as an example people’s LinkedIn profiles.

“I think most people are able to, with a little Nancy Drew work, conclude at least what company it might have happened at, if not who the offender was. So, I'm not sure that that would provide adequate security.”

Using an NDA: avoiding reputational harm

After the violinist from the VSO broke her NDA and spoke to media, the orchestra initially maintained that it had “acted both fairly and appropriately” based on a third‑party investigation. Following intense public criticism and a petition, it issued an open letter promising to end the use of confidentiality clauses in sexual misconduct matters unless specifically requested by the complainant.

Keith says any employer still using NDAs in harassment cases should be prepared for that kind of scenario.

“If you are going to have an NDA, plan for it to come out and plan for why you needed it in this case,” she advises, adding that if the alleged perpetrator was disciplined or dismissed, the employer shouldn’t be as concerned if the NDA is breached as they’ve taken appropriate steps.

She believes the reputational sting often comes from why secrecy was sought with an NDA.

“There may be legitimate reasons. There may be circumstances where it makes sense [such as] ‘We did an investigation, we couldn’t find anything, we didn’t think it had happened, but this is how we dealt with it.’”