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Keep all lawsuit settlements confidential!

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in Discrimination and Harassment,Human Resources

Here’s an important warning for employers that end discrimination or harassment lawsuits with settlement agreements that include a confidentiality clause: Keep those terms confidential and accessible only to those who absolutely need to know, such as the HR staffers who monitor the terms.

Otherwise, you could wind up facing a retaliation lawsuit if word of the settlement leaks out and the complaining employees encounter backlash.

Recent case: Catherine and several other women were marine cargo workers for companies represented by the Pacific Maritime Association, which negotiates union contracts for the shipping industry. They sued, alleging discrimination.

Their claims were settled with a confidential agreement that allowed the women to participate in training to become vessel planners.

Catherine soon began having problems in the training program. At least one instructor had a habit of commenting on female anatomy in ways that Catherine perceived as sexist and racist. For example, he once called a woman’s posterior a “J-Lo a**,” presumably a reference to actress Jennifer Lopez. However, he never made the comments directly to Catherine or other women.

Catherine also claimed that she wasn’t able to participate in all the training because supervisors excluded her. She said she got the worst room accommodations, didn’t receive training materials and essentially felt as if she were being excluded and set up to fail.

Catherine filed another lawsuit, this time alleging sexual harassment and retaliation.

She won before a jury, but part of her case was reversed on appeal. She lost the harassment claim when the court concluded the comments weren’t severe enough to constitute a hostile work environment.

But the appeals court said Catherine was entitled to a new trial on her retaliation claim. The court said she should have a chance to prove that someone leaked the confidential terms of the settlement to trainers, and that they then punished her by sabotaging her training. If she shows that, she will have proven retaliation.

In addition, the appeals court said Catherine may be able to introduce evidence that the other women who settled their original claims saw their training sabotaged after details of the settlement leaked out. This is so-called “me-too” evidence, which can be very persuasive for a jury trying to decide whether an employee has suffered retaliation. (McCoy v. Pacific Maritime Association, et al., No. B210953, Court of Appeal of California, 2nd Appellate District, 2013)

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