yes. by the employer.. seems to me that if there was a non-disclosure in place for a non s.. harrassement case the above the line deduction is not allowed but found this on the IRS site 

Question:

Does section 162(q) preclude me from deducting my attorney’s fees related to the settlement of my s.... harassment claim if the settlement is subject to a nondisclosure agreement?

Answer:

No, recipients of settlements or payments related to sexual harassment or sexual abuse, whose settlement or payment is subject to a nondisclosure agreement, are not precluded by section 162(q) from deducting attorney’s fees related to the settlement or payment, if otherwise deductible.  See Publication 525, Taxable and Nontaxable Income, for additional information on when all or a portion of attorney’s fees may be deductible.

I will check on the legal paperwork saturday but yes, agreed, if for physical injuries not taxable but that 162q section above gives the implication that the above the line deduction applies even if there is a NDA in place if the damages end up being taxable in the first place.. thank you for your input.