DAN PRICE NON-DISCLOSURE AGREEMENT: MUZZLING EMPLOYEES WITH FEAR TACTICS

According to legal precedent, a nondisclosure agreement (NDA) is traditionally crafted to support “fair competition by protecting confidential and secret information which stimulates research and development.” In other words, companies want to protect their ideas, innovations, client data and other means by which they are able to run viable, properly competitive businesses.

However, it is especially important for employees to understand that NDAs are “enforced only to the extent reasonably necessary to protect the employer's interest in confidential information” — emphasis on “reasonably.”

Legal precedent also stipulates that, generally, a contract is “not significant,” but the circumstances surrounding it are. These agreements are subject to “the rule of reason,” which would mean that most courts look at such agreements which violate the rule as being, at best, only partially enforceable.

When you break all of the jargon down to its very essence, you can safely say that NDAs can be reasonably enforced if the circumstances surrounding the enforcement are also reasonable.

This is significant, because while a company such as Gravity Payments — a financial tech company with proprietary processes and client data — can enforce the reasonable protection of proprietary assets, it would be hard-pressed to enforce unreasonable protections of, let’s say, its CEO’s alleged assault on basic human dignity.

Non-disparagement clauses have slowly, steadily, quietly crept into NDAs for seemingly no other reason than covering the hindquarters of those at the very top of the totem. We have seen such examples from our former President to media moguls to corporate titans. Such folks are not necessarily as interested in fair play as they are in building shark-infested moats around their iron-clad castles.

The primary issue at hand is whether NDAs with non-disparagement clauses will or should soon go the way of the Passenger Pigeon or the Tasmanian Tiger. Such clauses do their damnedest to censor whistleblowers, thereby sustaining company misconduct, or far that matter, the misconduct of company commanders.

States are beginning to acknowledge that times have changed, thanks in large part to movements such as #MeToo.

Hundred Eighty Degrees has conducted a multitude of interviews with former Gravity Payments employees. Every last one of them has said that he or she has witnessed or been subjected to workplace abuse at the hands of Gravity CEO Dan Price. And every last one has refused to go public about it.

The reason? A former Gravity manager said, “Price will sue me for breaching the terms of the NDA. I do not have that kind of money, but he does. And he’s more than willing to spend as much as he needs to shut me up.” Dozens upon dozens of others mirrored those very same comments.

Another source, who worked in Gravity sales, said that human resources staffers simply tell new hires that Price is who he is. His character assaults are part and parcel of the package if you want to work for a famous person.

Yet another source intimately familiar with all facets of the business said Price apparently added a robust non-disparagement clause to his NDA not long after he made his $70K wage announcement. He did so simply because he could. Global media attention, social influencing and a bundle of money enabled him to set any bar he wanted, the source said.

Many NDAs are also tied to severance agreements. If you don’t sign on the dotted line, you don’t get a check on the way out. Whether you live in an expensive market like Seattle or a middle America community in Idaho, every last penny nonetheless makes a difference, despite the possibility that the head honcho might have not only humiliated you in front of your peers but also committed multiple felonies.

The bottom line is that your boss tries to use a piece of paper with your name on it to effectively buy your silence.

Hundred Eighty Degrees will soon publish excerpts of Price’s amended NDA — after 2015. Here are a few clauses from a 2014 iteration.

CLAUSE 4d: Agreement Not to Compete

Employee further agrees that during his employment and for a period of three (3) years thereafter, Employee will not solicit or otherwise contact the Company's employees, strategic partners, referral sources, or agents, with whom Employee had contact during employment for the purpose of encouraging or engaging in competition with the Company for Credit Card Services business. This includes both direct and indirect solicitation and/or contact whether made separately, jointly, or in association with others.

ANALYSIS

This clause is unreasonable. An employee can challenge an employer who attempts to bar him or her from working in a specific professional arena for which that employee has developed specialized understanding and skill sets. Consider (1) whether the restraint is truly necessary to protect the employer’s business or goodwill, (2) whether it imposes on the employee any greater restraint than is reasonably necessary to secure the employer’s business or goodwill, and (3) whether enforcing the covenant would injure the public through loss of the employee’s service and skill to the extent that the court should not enforce the covenant. Price also demanded that his employees who breached such an NDA pay him $20,000 for the inconvenience of leaving him.

CLAUSE 5b: Secret Processes and Confidential Information

For the purposes of this Agreement, Confidential Information means any information concerning the business affairs, operations, and financial condition of the Company,

ANALYSIS

Note how that confidential information includes “business affairs,” which is a term wide open for interpretation. In other words, Price can deem his meetings — during which he allegedly harasses and humiliates and degrades employees — to be business affairs.

CLAUSE 5f:

Right to Injunction. Employee expressly agrees that the breach of any restriction contained in Section 5 or 6 hereof would result in irreparable injury to the Company, and that the remedy at law for any such breach would be inadequate. Upon breach of either of these provisions, the Company, in addition to all other available remedies, shall be entitled to injunctive relief in any court of competent jurisdiction.

ANALYSIS

By removing this to “any court of competent jurisdiction,” Price would be in command of a scenario that was legally favorable to him.

CLAUSE 7: NON-DISPARAGEMENT

Employee shall not, during or after Employee's employment, make any statements, whether oral or in writing, that would tend to disparage or defame the Company, its products or services, or its other Employees.

ANALYSIS

Again, for the reasons listed within this article, this is a sweeping and largely unreasonable, unenforceable measure that could be interpreted as nothing more than a gag order to preclude employees from disclosing the truth about Price’s alleged abuse, whether physical, psychological, verbal or financial.

So, when is a NDA unenforceable or perhaps illegal?

Harvey Weinstein coerced victims with mandates that required them to destroy evidence, tattletale on whistleblowers, even publicly praise him after he had assaulted them. Such secrecy all but sanctioned further criminal activity until the pink wave of #MeToo crashed into the public consciousness.

In California, change came in the form of Senate Bill 331, the Silence No More Act, which allows open discussion of workplace harassment and eliminates non-disparagement agreements that prohibit the disclosure of information about unlawful acts related to the workplace.

In Washington, RCW 49.44.210 makes it illegal to mandate agreements that prevent disclosure of sexual assault or sexual harassment associated with the workplace. The state adopted SB 6471, which established a breadth of sexual harassment policies.

Generally, if an employer commits an illegal act — such as sexual assault or fraud — or perhaps is in the process of being challenged for doing so, a non-disparagement agreement carries less weight. That said, an employer can certainly defend him or herself against such indictment.

The NDA must also abide the Equal Employment Opportunity Commission, including but not limited to Title VII of the Civil Rights Act of 1964 (Title VII). The Act makes it illegal to discriminate against someone on the basis of race, color, religion, national origin or sex and makes it illegal to retaliate against a person because the person complained about discrimination, filed a charge of discrimination or participated in an employment discrimination investigation or lawsuit.

Numerous former Gravity employees have said that Price habitually labels employees “stupid” or otherwise discriminates against them for being far less capable than he. While such discrimination might not be illegal, it ostensibly qualifies as workplace harassment.

A non-compete agreement — a nondisclosure derivative — can broach other considerations, including financial terms. In the state of Washington, where Gravity Payments is headquartered, “Only employees or independent contractors who earn more than the thresholds established by law can be held to non-competition agreements.” The current threshold is $100,ooo.

Thresholds and other mechanics aside, NDAs often illustrate the reality on the ground, not the public-facing brand.

Price is exceptional at publicly projecting goodwill and goody-two-shoes, aw shucks comportment. According to multiple accounts, he spends a day or two per month in the office and the rest ironing his already hardly wrinkled public relations persona.

Hundred Eighty Degrees has been privy to a video of one such PR exercise in which lackeys carefully deconstructed talking points so that Price could deliver a more profoundly populist if not messianic message to his masses.

All of this would be rather funny fare if it were not for the fact that two women have accused Price of rape, one of assault and battery and others — both women and men — have enumerated varying degrees of public and private malevolence.

Reporting dark deeds is a human right — and arguably a responsibility — that must not be subject to some onerous if not illegal proviso drafted by the very purveyors of harm.

Nothing should be proprietary about dismantling the dignity of others in front of peers. Nothing should be proprietary about driving one and then another and then another into tears and breakdowns and therapy and unrelenting fear. Nothing should be proprietary about fraudulently obtaining and engaging clients. Nothing should be proprietary about punching women in the stomach, raping them while they are unconscious or degrading them until they doubt their own self-worth.

If you are an employee with information about illegal or deeply unethical acts, your best way forward is not to clam up and carry on. Doing nothing about some serious somethings can also yield considerable if not lifelong repercussions.

Ask yourself this question. Is being complicit out of convenience and fear worth jeopardizing your future, let alone the health and well-being of others?

DAN PRICE NON-DISCLOSURE AGREEMENT: MUZZLING EMPLOYEES WITH FEAR TACTICS

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