Billionaire Michael Bloomberg talked about the presidency as a job he may or may not want. But while Bloomberg was a canny businessman who built a finance and media empire, his business acumen may have cost him the election. In one fell swoop, Elizabeth Warren landed a knockout punch to the candidate over his company’s use of non-disclosure agreements (NDAs) for women who experienced sexual harassment while working at Bloomberg.

Bloomberg the candidate later said three women cited by Warren could speak freely with no fear of legal action, but the damage was done. It was not long after the debate that Bloomberg the candidate dropped out, vowing to put his resources at the other candidates’ disposal.

Bad for politics, good for business

Some states outlawed NDAs, but they have many practical uses beyond covering up sexual harassment. These confidentiality agreements can prevent ex-employees or partners from disparaging the business they left. The more likely reason, however, is keeping proprietary or sensitive information out of the hands of competitors. This includes:

  • Trade secrets that provide a competitive edge
  • Information about services, products and pricing
  • A company’s business practices
  • Special training done for the previous job
  • Knowledge of consensual sexual relations that could be harmful to a business’s reputation

These documents should be modest in scope

Judges generally will not allow an overly restrictive NDA that prevents a former worker from seeking similar employment. Not only is it best to draft reasonable conditions, but NDAs must also be consensual. Businesses or employees with questions about NDAs can speak with an experienced business law attorney who prepares, negotiates or litigates these agreements. These legal professionals can help each side understand expectations and potential penalties.