Banning NDAs May Be Backfiring For Women Hoping to be Hired by Startups
New research finds that limiting nondisclosure agreements is linked to a drop in female hiring—especially at smaller firms with less HR infrastructure.
Laws intended to make workplaces safer and more inclusive may be having an unintended consequence: reducing the number of women hired by some startups, new research suggests.
In the wake of the #MeToo movement, several U.S. states passed laws limiting the use of nondisclosure agreements (NDAs) that prevent employees from speaking about sexual harassment and assault. In 2022, the federal Speak Out Act made it illegal to enforce agreements signed before any incident that prevent people from speaking about subsequent sexual harassment or assault.
These measures were designed to make workplaces fairer — particularly for women. But new research suggests that, in some parts of the labor market, they may also be discouraging firms from hiring women in the first place.
Researchers from the Yale School of Management, the University of Illinois Chicago, and Southern Methodist University analyzed data from roughly 85,000 venture-backed startups, comparing hiring patterns in states that enacted NDA-limiting laws with those in states that did not. They also examined changes before and after the laws took effect.
Josie Cox
The results were striking: Startups in states with these NDA-limiting laws hired about 8% fewer women annually after the laws were implemented, compared with startups in states without such laws. The decline was most pronounced in hiring for more junior roles—positions researchers suggest may carry a higher risk of workplace harassment.
One of the study’s authors, Song Ma of Yale School of Management, said the findings suggest some startups may perceive women—and particularly younger women—as riskier hires in the context of a stricter legal environment. “Startups may believe that they are vulnerable to potential issues from legal disputes,” Ma said. “The easy way to avoid that is to hire fewer women.”
The effect was strongest among smaller startups and those with relatively few female employees; perhaps not surprisingly, these firms were less likely to have formal human resources departments and policies or established anti-harassment policies.
By contrast, larger firms and those with more women on staff were also more likely to have structured HR practices, and showed smaller declines in female hiring.
The researchers also found a potentially positive development: Even as hiring slowed, the share of women promoted to managerial roles often increased when NDAs were limited. They suggest this may reflect turnover among male managers following the legal changes, creating opportunities for women to move into leadership positions. Increasing women’s representation in management, Ma noted, is often “a first step to strengthen women’s voices in the workplace.” That is likely to help women at every level.
Kathleen Davis
