Under the new federal “Speak Out Act,” employers will no longer be able to enforce pre-dispute non-disclosure and non-disparagement clauses to disputes involving sexual assault and sexual harassment claims. The new law, which passed with bipartisan support in Congress, was signed into law by President Biden on December 7. The new law took effect immediately.
The goal of the new law is to prevent the practice of using pre-dispute agreements to silence employees from reporting sexual impropriety in the workplace. Employers’ use of non-disparagement agreements (NDAs) to keep employees’ sexual harassment claims quiet came under scrutiny during the #MeToo movement.
The exact impact of the new law is not clear yet, however. A key limitation to the law is its application only to pre-dispute agreements. This means that NDAs containing non-disclosure or non-disparagement clauses entered into after a dispute concerning sexual assault or harassment has arisen are not prohibited or covered by the new law. However, employers still cannot preclude employees from reporting violations of employment laws to agencies entrusted with enforcing such laws, like the Equal Employment Opportunity Commission. Additionally, the law does not define the term “dispute,” making it unclear whether a dispute requires the filing of a lawsuit or whether a complaint to a manager or HR qualifies as a dispute.
In light of Congress’s findings that non-disclosure and non-disparagement clauses “can perpetuate illegal conduct by silencing those who are survivors of illegal sexual harassment and assault or illegal retaliation” and “shielding perpetrators and enabling them to continue their abuse,” the Speak Out Act makes such clauses judicially unenforceable in sexual assault or sexual harassment disputes where the conduct is alleged to have violated federal, state, or tribal law. The law defines a “non-disclosure clause” as “a provision in a contract or agreement that requires the parties to the contract or agreement not to disclose or discuss conduct, the existence of a settlement involving conduct, or information covered by the terms and conditions of the contract or agreement” and a “non-disparagement clause” as “a provision in a contract or agreement that requires 1 or more parties to the contract or agreement not to make a negative statement about another party that relates to the contract, agreement, claim, or case.”
Earlier versions of the Speak Out Act expanded the law’s application to disputes involving claims of race, age, national origin, and similar equal employment opportunity claims, but the scope of the bill was limited to sexual harassment and sexual assault disputes in its final form.
Employers are advised to review existing handbook policies and standard NDAs to ensure compliance with the Speak Out Act. Involving an experienced employment law attorney in this review can assist employers in ensuring compliance with the new law.
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