- 45% of workers surveyed said they’d been subject to a nondisclosure agreement.
- 39% of workers said they were bound by mandatory arbitration, according to a survey from Penn State.
- The agreements aren’t applied equally: 27% of women said they were subject to a noncompete, versus 17% of men.
Nondisclosure agreements and mandatory arbitration have become rampant in the workplace, according to a new survey of job seekers. A second survey found that employees who sue in court get higher payouts than those required to pursue claims through arbitration.
The research papers by Mark Gough, an assistant professor of labor and employment relations at Penn State University, expose how widely companies have adopted mechanisms to silence employees and dictate the terms by which allegations of workplace misconduct are resolved.
For one study, set to be released later today in advance of the findings being submitted for peer review, Gough conducted a survey of 947 people who sought jobs across a wide range of industries in the US during the summer and fall of 2024, asking respondents whether they were bound in their most recent employment contract by a variety of restrictive agreements, including NDAs, noncompete clauses, and nonsolicitation clauses.
In the study, “Contracts that bind: Untangling the use of NDAs, forced arbitration, and other restrictive covenants in the US labor market,” Gough found that nondisclosure agreements have become ubiquitous, with 45% of respondents required to sign them as a condition of employment.
Mandatory arbitration has also become common, with 39% of respondents bound by it. Twenty-two percent said they had to sign noncompetes.
Gough found that these agreements weren’t imposed uniformly. Forty-eight percent of Black respondents, for example, reported being required to sign away their right to participate in a class action suit, compared with 39% of white respondents. While 42% of white respondents said they were bound by NDAs, that ratio jumped to 45% for Black respondents and 53% for Asian respondents.
Women reported being bound by noncompetes at a higher rate — 27%, compared to 17% for men. Women also reported signing NDAs at a slightly higher rate than men did, 47% versus 43% for men.
Restrictive agreements were imposed more often on college graduates than those without degrees. And several agreements — mandatory arbitration, class action waivers, and NDAs — were far more common among respondents 50 and older.
“There is a lot of silencing going on, and it’s felt unequally across the workforce,” Gough told Business Insider. “Even in terms that employers care about, these aren’t costless. You are turning your potential employees off. Immediately, they think less of your firm. That has consequences, particularly in a competitive labor market.”
Survey respondents expressed particular concern about being asked to sign noncompetes, mandatory arbitration agreements, and NDAs.
While the widespread use of NDAs in the workplace is no secret, measuring the frequency and scope of the pacts has been difficult given the nature of the agreements. Many employees who previously shared copies of their NDAs with BI said they regretted agreeing to them and didn’t fully understand the constraints they were saddled with by signing.
Originally, nondisclosure agreements were designed to protect confidential trade secrets. But over time, the language in these secrecy pacts has expanded to include nondisparagement clauses and limitations on disclosing alleged workplace misconduct. The use of NDAs to silence victims of harassment and discrimination, in particular, has been hotly debated for much of the past decade, with new laws passed at both the state and federal level in the wake of the #MeToo movement that restrict the ability of companies to enforce NDAs in those situations.
“These silencing agreements have allowed much of corporate America to remain stain-free,” Gretchen Carlson, the former Fox News anchor, told BI. With political consultant Julie Roginsky, Carlson cofounded the nonprofit advocacy organization Lift Our Voices, which advised Gough on his research. The women helped spearhead the effort to pass the most prominent piece of federal legislation to restrict the use of NDAs, the 2022 Speak Out Act, which bars the use of NDAs to gag victims of sexual abuse and harassment.
For Gough’s second study, “Forced to settle: The unseen costs of arbitration vs. litigation,” he surveyed 479 employment law attorneys about their experience pursuing claims in court and through private arbitration. That survey found that employee plaintiffs are much more likely to prevail in disputes that are litigated in court and to receive significantly larger payouts than those who go through arbitration.
“These findings raise critical questions about whether arbitration can genuinely serve as an effective alternative to litigation, particularly when it comes to delivering equitable financial compensation,” Gough writes.
Roginsky told BI the findings confirm her experience, that harassment and discrimination claims forced into arbitration typically resolve in favor of the company and leave employees with no option to appeal.
“The arbitrator knows they can come back for more business with the company; it’s in their interest to rule in favor of the company,” Roginsky said. When it comes to bringing a claim, she said, “If you have a forced arbitration clause, what’s the point?”
In 2021, BI published a series of stories examining the deployment of NDAs and nondisparagement agreements at Silicon Valley tech companies, based on a review of records shared by employees. Since then, numerous employees have come forward to break their NDAs and speak out about sexual harassment and discrimination, stirring debates over the misuse of the agreements to silence whistleblowers and prompting executives at Apple to pledge in 2022 to restrict how the company uses NDAs moving forward.
Matt Drange is a reporter on Business Insider’s investigations desk. He’s frequently covered workplace misconduct issues involving NDAs. Have a story tip? Reach out to Matt securely.
