Harvey Weinstein scandal puts nondisclosure agreements in the spotlight

PHOTO: Producer Harvey Weinstein appears at a panel discussion in Pasadena, Calif., Jan. 6, 2016. PlayRichard Shotwell/Invision/AP, File
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As the Harvey Weinstein scandal rapidly unfolded, with dozens of women coming forward to accuse the movie mogul of sexual harassment and, in some cases, assault over a 30-year period, it shed light on a common if not always understood legal provision -- the nondisclosure agreement.

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Commonly referred to as confidentiality agreements, these provisions used in settlements or contracts are essentially a vow of secrecy.

With the Weinstein scandal, they have not only come into focus but under fire.

Earlier this week, one of Weinstein's former assistants in Miramax's London office publicly denounced the use of NDAs, and, in doing so, broke her own.

Zelda Perkins told the Financial Times that she wants to shine a light on these types of agreements in which "the inequality of power is so stark and relies on money rather than morality."

She said, "I want other women who have been sidelined and who aren't being allowed to own their own history or their trauma to be able to discuss what they have suffered. I want them to see that the sky won't fall in."

Days before she spoke out, members of the Weinstein Co. staff released a statement to The New Yorker asking the Weinstein Co. to let them out of their NDAs "so we may speak openly, and get to the origins of what happened here, and how."

"We knew that our boss could be manipulative. We did not know that he used his power to systematically assault and silence women," the statement, signed by "select members of the Weinstein Co. staff," said. "We had an idea that he was a womanizer who had extramarital affairs. We did not know he was a violent aggressor and alleged rapist."

In response to the allegations, a spokesperson for the movie executive said, "Any allegations of nonconsensual sex are unequivocally denied by Mr. Weinstein."

"Mr. Weinstein has further confirmed that there were never any acts of retaliation against any women for refusing his advances. Mr. Weinstein obviously can't speak to anonymous allegations, but with respect to any women who have made allegations on the record, Mr. Weinstein believes that all of these relationships were consensual," the spokesperson said in a statement. "Mr. Weinstein has begun counseling, has listened to the community and is pursuing a better path. Mr. Weinstein is hoping that if he makes enough progress, he will be given a second chance.”

Days after reports surfaced, Weinstein was fired from the Weinstein Co., and he later resigned from its board of directors. He was also expelled from the Academy of Motion Picture Arts and Sciences.

Now there is new scrutiny on the NDA or confidentiality agreement. To learn more about what they are and to better understand how they might contribute to a culture of secrecy around sexual harassment, ABC News spoke to Jonathan Handel, a Los Angeles entertainment and technology attorney who is also a contributor to The Hollywood Reporter, and New York attorney Kathleen Peratis, who heads up her firm's sex discrimination and sexual harassment practice group.

1. What are nondisclosure agreements?

"They are a standalone agreement or provision in another contract that restricts someone from talking about things," Handel said. "They arise in two contexts -- one as part of documents an employee signs for employment with a company, another as a settlement agreement."

"In settling claims regarding employments, they are not only common, you never see a settlement of a claim that does not include a confidentiality agreement," Peratis said.

NDAs typically restrict the person from disclosing the agreement or saying anything disparaging about their employer, she added. "You can’t say disparaging things about an employer, even if it's true," she said.

"The employer gives you money and you give the employer a release and a promise of silence," Peratis said. "That’s the basic structure."

2. Are all NDAs bad?

"There are aspects that are highly legitimate," Handel said, such as in situations involving trade secrets, where they are "understandable and generally noncontroversial."

"In the context of sexual harassment, the results have been less salutary and more harmful to what they do to society," he said. That's especially true, Handel said, in the case of serial offenders.

"[NDAs] enable someone who very much appears to have been a serial predator, harasser and abuser, not someone in one instance who stepped over the line," he said.

3. How can NDAs contribute to a culture of silence around an issue like sexual harassment?

"This culture of secrecy and lack of transparency has arisen in the employment context because no one likes being accused of discrimination," Peratis said. "[NDAs] do perpetuate the very wrong that they arose out of. There’s no question -- having things be in the shadows perpetuates those things."

"[NDAs] contribute to a culture of silence because they are a legal agreement that the victim will remain silent," Handel said. "Silence is the pillar."

4. Can an NDA protect criminal wrongdoing?

"The law makes a distinction -- perhaps not the correct one -- between going to authorities on one hand and going to the press on the other. You can go to the police," Handel said, in cases where a crime has been committed. "And you should have a lawyer advising you to make sure you don’t do anything that steps over the line into potential liability in the NDA."

Criminal prosecution is not blocked by NDAs but there are other things to consider, Handel and Peratis said, like the statute of limitations, if the incident occurred many years before and a prosecutor's willingness to pursue the case.

Employees can also report allegations of harassment to the federal Equal Employment Opportunity Commission and corporate whistleblowers can contact the Securities and Exchange Commission.

5. What happens if a person with an NDA goes to the press?

"It depends on what the agreement says," Peratis said. "If you breach it, the employer can claim all the money back. A lot of clients have called me and said, 'What can I do?' I tell them if you made a deal and you break that deal, you’re vulnerable. The defendant might well come after you."

Peratissaid it might start with a cease-and-desist letter followed by legal action.

In the Weinstein case, Handel said, "This is where we get into the distinction between what could happen versus what’s likely." He added, "My guess is that he is not going after them."

6. Should victims of sexual harassment sign NDAs and help perpetuate the culture of silence?

"What lies underneath is a hard moral question: What responsibility does a victim have to potential future victims, assuming it's not a one-off or one-time mistake?" Handel said. "What the victim owes not just herself but future victims is a very hard question. In effect, you're asking me to tell someone who has been in this awful situation what to do. I can’t."

"I'd love to be able to advise my clients [what to do]," Peratis said. "But it's not my decision."

7. So how do we prevent serial offenders from using NDAs to victimize others?

"The only way to stop this is through some official body -- the legislature," Peratis said. "One by one, lawyers like us cannot do it."

Handel said in California, where legislation is already being considered to bar such agreements from sexual harassment cases in much the same way as they are in felony sexual assault and child sex abuse cases, he'd like to see some legal method that addresses the concerns of all parties, including the alleged offender. As for a serial offender, he said there should be some sort of trigger that nullifies previous agreements if there is a second offense.

"It’s increasingly uncomfortable that a legal measure plays a part in sustaining a culture of silence around sexual harassment," he said.

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