Juul Settles Claims It Illegally Silenced Employees With NDAs

(Bloomberg) -- Juul Labs Inc., the E-cigarette maker, agreed to pay as much as $2.2 million to settle claims it violated the rights of employees by forcing them to sign non-disclosure agreements.

Attorneys for the employees asked a federal judge on Thursday to approve the accord, which requires the company to further amend its non-disclosure agreement and to notify workers about their free-speech rights.

The settlement comes as Juul fights thousands of lawsuits accusing it of targeting children in advertising and fueling a youth vaping epidemic. 

The employee case took aim at non-disclosure agreements both new and departing workers were required to sign that barred them from speaking negatively about the company to any outsider, even courts or investigative agencies.

“We are pleased the parties have reached an agreement to settle, but we continue to dispute the plaintiff’s allegations,” Juul spokesperson Joshua Raffel said in an email.

The employees’ lawyers argued that the NDAs violated California whistle-blower law and other parts of the state’s labor code, including one that guarantees the right of workers to freely talk about working conditions, as long as they don’t disclose proprietary information.

Read More: Juul Beats Ex-Worker’s Claim She Was Barred From Whistle-Blowing

After the suit was filed in June 2020, Juul revised its NDAs. Under the settlement, it is required to do more, including notifying workers of their various free-speech rights under California law.

“The settlement provides immediate relief to the aggrieved employees and greatly benefits the public,” the workers’ attorneys said in court papers. “Among other things, the settlement notifies more than a thousand employees that their NDAs do not prevent them from exercising the rights provided by California’s anti-gag rule, including the right to whistle blow and speak.”

Altria Group Inc. owns a 35% stake in Juul.

The case is Hamilton v. JUUL Labs, Inc., 20-cv-03710, U.S. District Court, Northern District of California (San Francisco).

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