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September/October 2022 - ENTREPRENEUR OF THE YEAR

With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.

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Y ou're president of a company that has been hit with two sexual harassment lawsuits in the past year. To avoid future problems (and the attendant bad PR) you've decided to make all employees sign a comprehensive non-disclo- sure agreement covering any possible workplace wrongdo- ing. Will this fly? In the television series Sever- ance, as a condition of employ- ment new hires of fictional Lumon Industries are medi- cally bifurcated into completely separate entities—their work selves ("innies") and outside-of- work selves ("outies")—thereby ensuring that what happens in Lumon stays in Lumon. Cue ominously dark music over a TikTok loop of George Orwell saying, "I told you so." As the series slyly observes, working at Lumon is "the ul- timate work-life balance." In a way, however, it's also the ultimate non-disclosure agree- ment, or NDA, a legal tool that has become more prominent, and controversial, lately. Some context: NDAs have been an important part of cor- porate culture for years. Until recently, however, they were mainly used to ensure that for- mer employees didn't peddle trade secrets or reveal critical proprietary corporate informa- tion. In these situations, NDAs serve a very specific, reason- able purpose. That said, NDAs are also regularly used to prevent po- tentially disparaging informa- tion from surfacing. However, this function is not necessarily nefarious, says David Brown, a partner with the Vancouver office of law firm Stikeman El- liott. "We use them a lot. We have non-disclosure and non- disparagement agreements in litigation settlements all the time," he says. Often, they're used as the period on the end of a sen- tence: once a deal has been struck between two parties, it allows both to put the nastiness of the conflict behind them, without having to worry about the specifics burbling up in, say, a business magazine. But for those who want to use NDAs as a sort of preemp- tive cudgel? Don't depend on it. "It's very unlikely that it would be enforceable," says Brown, adding that, in this situation, there's a solid basis to resist enforcement. "Courts have an overriding power to say that a contract is 'uncon- scionable.' Something like this, where you've got very unequal bargaining power and where you've got a purpose that's contrary to normal public policy values, is likely to be unenforceable." Since there's an obvious power disparity between the employer and the employee, any agreement would be evalu- ated in light of this. Beyond that, though, it has 'backfire' written all over it. "I think even a level up from that, it's just a terrible idea. It's the opposite of the old proposition that 'sunlight is the best disinfectant,'" says Brown. While attempting to pre- emptively muzzle your employ- ees to avoid the fallout from future bad behavior is problem- atic, using an NDA to keep the details of a sexual harassment settlement under wraps could work—as long as both parties came to the table with legal rep- resentation, and made choices that didn't put the victim at a significant disadvantage. Even then, when one party decides to violate the NDA, the horse has basically bolted the barn. Case in point: before the 2016 U.S. presidential election, the lawyer for a certain disgraced former U.S. president allegedly paid a pornographic film star USD $130,000 to keep certain in- formation from surfacing. But we all know how "the worst 90 seconds" of Stormy Daniel's life, as she described it, turned out—as a guarantee of silence, this NDA failed. Situations like the one above may not be long for the legal world. Prince Edward Island already has legislation on the books that prohibits the use of NDAs in sexual harassment, sexual assault or discrimina- tion cases (unless initiated by the victim), and similar legisla- tion is pending in Nova Scotia. (Hat tip to Stikeman articling student Paige Zambonelli.) For the time being, though, it's likely that some will con- tinue to attempt to use NDAs as gags. The antidote? It may as simple as a Broadway show tune: Let the sunshine in. Fictional scenario. Not in- tended as legal advice. n S H I F T H A P P E N S Gag Me NDAs definitely have their place in corporate parlance, but they're not as powerful as you might think by Guy Saddy ISTOCK ( the informer ) SEPTEMBER/OCTOBER 2022 BCBUSINESS 23

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