Nordstrom appropriately uses concealment clauses in employment agreements to protect confidential corporate information. However, Nordstrom’s employment-related agreements may prohibit workers from speaking publicly about harassment, discrimination, or other unlawful acts, which may contribute to a toxic workplace.

It is not known to what extent Nordstrom uses non-disclosure or non-disparagement agreements. Nordstrom’s Dispute Resolution Program requires prospective and existing employees to agree to mandatory, binding arbitration; give up their rights to a judge or jury trial; and limits their ability to conduct discovery and participate in class actions. This explicitly includes claims related to working conditions, discrimination, harassment, and retaliation.[1]
Nordstrom has faced few public allegations of harassment and discrimination. With mandatory arbitration and possibly other concealment clauses in use, investors cannot know if this is a result of Nordstrom’s strong human capital management or a result of its use of manipulative legal tactics.
A healthy workplace culture is linked to strong returns. McKinsey found that companies in the top quartile for workplace culture post a return to shareholders that is 60 percent higher than those in the median and 200 percent higher than organizations rated in the bottom quartile for healthy workplace culture.[2] A study by the Wall Street Journal found that over a five-year period, the 20 most diverse companies in the S&P 500 had an average annual stock return almost six percentage points higher than the 20 least diverse companies. In contrast, a workplace that tolerates harassment invites legal, brand, financial, and human capital risk. Companies may experience reduced morale, lost productivity, absenteeism, and challenges in attracting and retaining talent.[4] Companies such as Alphabet,[5] Apple,[6] Microsoft,[7] and Salesforce,[8] among others, have ended their use of concealment clauses.

Nordstrom operates under a quickly changing patchwork of state and federal laws related to use of concealment clauses and will likely benefit from a consistent practice across all employees and contractors, no matter the law of a particular jurisdiction. As of November 2022, “The Speak Out Act,” which limits non-disclosure agreements when sexual harassment is claimed, is expected to be signed into federal law by the President.[9] It joins existing federal legislation which ended the use of forced arbitration in workplace sexual assault and harassment cases.[10] California, Maine, New York, Washington, and other states have also reduced employers’ abilities to use concealment clauses.