MARTINSVILLE – With all the various sexual harassment stories popping up in the news, one is reminded of the old walnut shell game. Wondering which shell hides a kernel of corn is fun for a child, but for adults hunting for kernels of truth in the name of fairness, the political shell game is troubling.

What factors hide the truth when public officials are charged with sexual harassment or other objectionable conduct? Universally, there are unwritten codes of conduct to not be a tattletale. Additionally, when an elected official holds perceived power over staff or other office holders, then support or silence may be seen as a critical political survival tactic. 

If the conduct and the threat of public knowledge are serious enough, an accused officeholder may make a payment or a settlement that includes a provision that the settlement or payment cannot be disclosed. This kind of agreement is known as a non-disclosure agreement (NDA) and has historically withheld the kernel of truth from public scrutiny.

Such agreements or settlement are rumored to be fairly common. Who knows whether Indiana has legislators who have paid for such agreements? There are no requirements for public disclosure about sexual harassment claim payments and Indiana officeholders. Whether any public funds have been used to pay claimants of harassment is not easily ascertainable by the public.  

Regardless of what may be happening in Indiana, there are several indications that the confidentiality of such payments may be short-lived, at least in states other than Indiana. A number of states have considered and a few have enacted legislation about non-disclosure agreement enforcement. 

The National Conference of State Legislatures reports that “2018 has brought an unprecedented amount of legislation on sexual harassment and sexual harassment policies. Some 32 states have introduced over 125 pieces of legislation.

States have introduced legislation to expel members, criminalize sexual harassment in legislatures, and mandate harassment training within the legislature, among other topics.” 

One example of a state’s legislative activity was enacted by the Legislature of the State of Arizona: 2 Section 1. Title 12, chapter 6, article 12. Confidentiality agreements; disclosure of information relating to sexual assault or sexual harassment; applicability.

A. A confidentiality agreement that restricts the disclosure of factual information that is related to a sexual assault or sexual harassment, including factual information that is related to an allegation of or attempted sexual assault or sexual harassment, is against this state’s public safety and policy and is void and unenforceable.

B. A person may not enter into a confidentiality agreement that restricts the disclosure of factual information that is related to an allegation of or attempted sexual assault or sexual harassment by an elected official.

C. This section does not apply to the disclosure of a minor crime victim’s medical or personal identifying information or to other information that is specifically protected from disclosure by law.

Indiana is not the only state that is dealing with these questions. Wisconsin taxpayers paid $75,000 to a former lawmaker’s aide who complained of sexual harassment and discrimination and filed a complaint alleging she was wrongfully fired from her job, records show.

As the states consider various provisions, there are strong policy reasons to require public disclosure of such agreements by elected or appointed officials.

What is the fair balance for protection of the privacy of a legitimate victim as well as for the protection of wrongfully accused public official? Being a victim should not require one’s sacrifice of privacy just as being a public official should not put a target on one’s back. The argument is stronger for requiring disclosure when public officials are involved than when an agreement is between to two private parties. When public trust is assailed on all sides and transparency is bandied about like a political shibboleth, maybe it is time to consider what must be disclosed. 

The National Conference of State Legislatures prepared a memo on Sexual Assault in the Workplace and it was updated in June 2018. The memo provides a state-by-state review.

Do I think the Indiana General Assembly is going to deliberate upon any question of appropriate disclosure of NDA? Nope! I am predisposed to believe that past experience is often indicative of the future in Indiana.

Rep. Matt Pierce from Bloomington introduced House Bill 1237 last session and it was promptly assigned to the House Judiciary Committee by Indiana House Speaker Bosma, never to see the light of day. Rep. Pierce apparently thought the subject matter presented an emergency need for this bill and included language for the law to become effective on July 1, 2018. 

Here is the rather simple, easy to understand, language of the bill:

A BILL FOR AN ACT to amend the Indiana Code concerning civil procedure.

Be it enacted by the General Assembly of the State of Indiana:

Chapter 4. Certain Nondisclosure Agreements

Sec. 1. This chapter applies to agreements or contracts entered into after March 31, 2018.

Sec. 2. (a) Except as provided in section 3 of this chapter, a provision in any agreement or contract that has the purpose or effect of concealing details relating to a civil claim or settlement or resolution of any civil claim of:

(1) sexual assault;

(2) sexual harassment; or

(3) sexual discrimination;
is declared to be contrary to the public policy of Indiana and void.

(b) The claim described in subsection (a) includes:

(1) a formal or informal internal complaint; or

(2) threatened, anticipated, or commenced litigation.

Sec. 3. The name of the person who claims to be the victim of:

(1) sexual assault;

(2) sexual harassment; or

(3) sexual discrimination;

And who is a party to an agreement or contract described in section 2 of this chapter shall be withheld from disclosure at the person’s request or by court order.

SECTION 2. An emergency is declared for this act.

Beyond Indiana, at the federal level we see some slight advancement of the public policy argument to discourage non-disclosure terms in settlement agreements in the tax code. The Internal Revenue Code §162(q) as recently passed by Congress in the 2017 Tax Cuts & Jobs Act) states:

No deduction is allowed for any settlement or payment related to sexual harassment or sexual abuse if the settlement or payment is subject to a nondisclosure agreement. No deduction is permissible for attorneys’ fees related to a confidential sexual harassment settlement or payment. These payments remain tax-deductible, however, if they are not subject to a nondisclosure agreement.

It is interesting that the tax code is aimed at private taxpaying employers. Prior to the tax code revision, many settlement agreements included confidentiality or nondisclosure clauses. The strategy behind the change appears to be to force employers to decide whether to forfeit tax benefits to retain secrecy or be able to deduct the payments as business expenses. If the provision was intended to discourage companies and their executives from hiding these claims about sexual conduct in the workplace from public scrutiny, what about public officials?

Current events are raising lots of questions about who benefits and when is a public interest to be served by non-disclosure agreements. These questions are just not publicly discussed in Indiana.  

Don’t you just love sunlight along the Wabash?