Document Type
Article
Publication Title
Vanderbilt Law Review
Publication Date
1-2024
ISSN
0042-2533
Page Number
51
Keywords
dispute resolution, discrimination, confidential settlements, employment law
Disciplines
Dispute Resolution and Arbitration | Labor and Employment Law | Law
Abstract
The #MeToo movement exposed how workplace harassment plagues employment in the United States. Several states responded by passing legislation aimed at curbing harassment and employment discrimination in the workplace. One of the most common legislative efforts was to ban confidentiality provisions in certain settlement agreements. These bans, in part, attempted to stop “secret settlements” by shining light on workplace discrimination and exposing serial harassers as a means to motivate firms to actively deter workplace discrimination.
But do bans on confidentiality agreements deter the bad act? For these laws to have a deterrent effect, claims must be revealed in a public forum. The onus is therefore on victims to go public, and understandably, many victims are wary of doing so. After all, even from a pro-victim perspective, if employers cannot require confidentiality in settlement, claimants could be made worse off through a lower likelihood of settlement and a lower ultimate payout. In this situation, unless victims’ allegations are made public, bans on secret settlements may not deter discrimination.
At the time states enacted confidentiality bans, there was no empirical evidence supporting these bans’ deterrent effects. This Article offers the first empirical assessment of laws barring confidentiality provisions in employment discrimination settlements. Using data on large samples of employment disputes, we leverage the variation in state legislation to empirically test the effects of these bans on filing and disposition of discrimination claims in arbitration and courts. Our results suggest an increase in the filing of claims in federal court, which is encouraging evidence of the overall deterrence value of the laws. However, the results also show a small decrease in settlement in federal court and arbitration, which may weaken the deterrence value of confidentiality bans unless plaintiffs are more likely to prevail. To achieve a higher deterrent effect, legislatures should couple these bans with additional measures, such as increasing the likelihood that a victim prevails in court and increasing the amount of damages that a victim can be awarded.
Recommended Citation
Joni Hersch and Blair D. Bullock,
The Impact of Banning Confidential Settlements on Discrimination Dispute Resolution, 77 Vanderbilt Law Review. 51
(2024)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/1600