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P.E.I. Non-Disclosure Agreements Act: 3 Key Facts for Employers

Published:

February 8, 2022

Author(s):

Ryan McCarville

Updated June 17, 2024.

On May 17, 2022, the P.E.I. Non-disclosure Agreements Act took effect, significantly restricting the use of non-disclosure agreements (NDAs) in P.E.I. harassment cases. Driven by the #metoo movement and intended to prevent the silencing of harassment victims, the objective is laudable. The popularity of this type of legislation has been growing in the U.S. over the last couple of years. But the P.E.I. Act is the first of its kind in Canada – though it’s unlikely the last. Multiple provinces have introduced similar legislation, but none have (yet) passed:

In April 2022, Nova Scotia introduced Bill 144 – Non-disclosure Agreements Act. In March 2023, the Act was re-introduced as Bill 278.
In October 2022, Manitoba Bill 225, The Non-Disclosure Agreements Act, passed second reading and was sent to Standing Committee in early November 2023 but was not proceeded with.
In June 2023, Ontario Bill 124, Stopping the Misuse of Non-Disclosure Agreements Act, 2023 passed First Reading in the Ontario Legislature.
In March 2023, British Columbia Bill M 215, Non-Disclosure Agreements Act was introduced for First Reading in the B.C. Legislature.

The P.E.I. Act raises some questions that will likely require litigation to resolve. Here are three key facts about the P.E.I. Act and some of the issues it raises for employers.

1. The Act targets the workplace

Employers are among those on which the Act will have the greatest impact. Technically, the Act isn’t limited to NDA’s in relation to workplace harassment. Practically, however, the workplace is a predominant target. The NDAs to which the Act applies are those between the person alleging harassment and the alleged harasser or the “party responsible”: a person with a legal obligation to take reasonable steps to prevent harassment and discrimination in the place it was alleged to have happened. The recently effected Workplace Harassment Regulations under the P.E.I. Occupational Health& Safety Act leaves no doubt that this includes employers. Practically, studies are clear that a great deal of harassment that happens, happens in the workplace. Finally, the legislative debates and discussions around the Act make it clear the Act targets workplace harassment – and by necessary implication, employers. Employers with P.E.I. employees are wise to review their processes, procedures, and documentation related to harassment investigations and settlements, including any standard form of settlement agreement and release, to ensure they are consistent with the Act.

2. The Act covers more than sexual harassment

The Act defines “harassment” widely as any action, conduct or comment that can reasonably be expected to cause offence, humiliation or other physical or psychological injury or illness to a person, including sexual harassment – but not limited to sexual harassment. This definition isn’t identical to that in the P.E.I. Workplace Harassment Regulations, but it probably captures much of the same conduct. However, it’s notable that the Harassment Regulations’ definition expressly exclude a reasonable action taken by an employer or supervisor relating to the management and direction of the workers or of the workplace. Also notable is that the Act’s definition of “harassment” doesn’t mention “discrimination” (although at law, harassment on the basis of a ground protected by the P.E.I. Human Rights Act likely constitutes discrimination on that same basis), but the Act’s prohibition against non-compliant NDAs expressly encompasses both harassment and discrimination complaints.

3. The Act both prohibits some NDAs & restricts permitted NDAs

The Act doesn’t prohibit the use of NDAs in harassment settlements per se. However, it does expressly prohibit NDAs unless entering the NDA is the “expressed wish and preference” of the person alleging the harassment. Exactly how the person’s “expressed wish and preference” is evidenced, beyond the fact the person alleging the harassment signs the NDA, isn’t clear. However, it may mean employers are prudent to obtain, for example, the alleger’s sworn Affidavit evidencing this preference. Even an NDA that is the “expressed wish and preference” of the person alleging the harassment is only enforceable if it meets these conditions:

The person alleging harassment has had a reasonable opportunity to obtain independent legal advice. As a result, employers are wise to require a person alleging harassment who signs an NDA provide a Certificate of Independent Legal Advice, a legal form commonly used in other contexts. If they don’t actually seek independent legal advice, again, it’s not clear how this opportunity is evidenced, except by way of a sworn Affidavit.

There’ve been no “undue attempts” to influence the person alleging harassment respecting the decision to include a prohibition against disclosing any material information. Again, a sworn Affidavit might be required.

It doesn’t adversely affect either: the health or safety of a third party, though it’s not clear who such a third party would be or how they might be adversely affected; or the “public interest”, the meaning of which is undefined – and unclear.

It includes an opportunity for the person alleging harassment to decide to waive their “own confidentiality” in the future and the process to do so. This seems to be a safeguard to ensure that a person alleging harassment isn’t prevented from sharing their experience in the future. However, it’s unclear the scope of the confidentiality the person can waive, or what such a process would look like.

It’s of a “set and limited duration”. There are, however, no maximum limits on the duration of any permitted NDA.

Finally, the Act prohibits a “party responsible” (including an employer) from entering into an NDA with a person who committed (or allegedly committed) harassment or discrimination for the purpose of preventing a lawful investigation into a harassment or discrimination complaint. However, “lawful investigation” isn’t defined, and its scope is unclear; for example, while a police investigation is likely a “lawful investigation, it’s not clear whether a workplace investigation by an employer is a “lawful investigation”.

Please contact your McInnes Cooper lawyer or any member of our Labour & Employment Law Team @ McInnes Cooper to discuss how the P.E.I. Non-disclosure Agreements Act will affect you.

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