On December 7, 2022, President Biden signed the Speak Out Act (the “Act”) into law. The Act limits the enforceability of pre-dispute non-disclosure and non-disparagement clauses relating to sexual assault and sexual harassment claims, but does not prohibit such provisions in settlement agreements or severance agreements.
The Act prohibits the enforcement of non-disclosure agreements (NDAs) and non-disparagement clauses between employers and employees and independent contractors, and between goods and services providers and consumers, that were in place before a sexual assault or harassment dispute arises. In its Statement of Administration Policy, the Biden Administration noted that NDAs can “silence survivors, while shielding and allowing perpetrators to continue abusive behavior.”
The Act 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.” It likewise defines 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.” The Act defines a sexual assault dispute as a dispute involving “a nonconsensual sexual act or sexual conduct” as those terms are defined by federal, state, or tribal law. Similarly, a sexual harassment dispute is defined as a dispute related to conduct that is alleged to constitute sexual harassment under federal, state, or tribal law.
In practice, the Act will likely have limited impact as it includes a number of limitations. Most significantly, the Act applies only to non-disclosure and non-disparagement clauses in agreements entered into before a sexual assault or sexual harassment “dispute” arises. It does not impact NDAs and non-disparagement provisions in agreements that parties enter into after a dispute arises. Therefore, separation and settlement agreements entered into after an employee makes a claim alleging sexual assault or harassment are not impacted. Additionally, most pre-dispute nondisclosure and confidentiality agreements are designed to prevent the future use or disclosure of proprietary information and trade secrets, not to prevent disclosure of sexual assault and harassment. The Act does not impact the ability of employers to protect trade secrets and proprietary information, expressly carving out confidentiality and nondisclosure provisions intended to protect such information.
The Act is part of a continuing trend by the federal government to protect victims of sexual assault and harassment by allowing them to speak publicly about their experiences. As we previously reported, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, signed into law on March 3, 2022, amended the Federal Arbitration Act (FAA) to make pre-dispute arbitration agreements for sexual assault and harassment claims invalid and unenforceable.
While the Act’s scope is currently limited, the Biden Administration expressed its desire to expand the Act. Specifically, the Biden Administration declared that it “looks forward to continuing to work with Congress to advance broader legislation that addresses the range of issues implicated in NDAs and non-disparagement clauses, including those related to discrimination on the basis of race, unfair labor practices, and other violations.” In addition, more than a dozen states have enacted similar laws. Some of these state laws, including those in Washington and California, limit non-disclosure and non-disparagement provisions more broadly than the Act. Therefore, employers in those states will need to comply with the broader requirements imposed by applicable state law.
California’s SB 331, known as the Silenced No More Act, is far broader than the federal Act. SB 331 prohibits confidentiality provisions in settlement and separation agreements involving claims of workplace harassment or discrimination on any protected basis, not just those based on sexual assault and sexual harassment. SB 331 also prohibits employers from including non-disparagement provisions that ban employees from disclosing information about any type of harassment or discrimination or other conduct that an employee reasonably believes is unlawful, in exchange for a promotion, bonus, or continued employment, unless the agreements include specific carveout language. Importantly, SB 331 is not limited to pre-dispute agreements, and expressly applies to settlement and separation agreements, which are not impacted by the federal Act. You can read our prior blog article on SB 331 here.
How Should Employers React?
In light of the federal and state law trends to protect victims of sexual harassment and sexual assault, employers who include non-disparagement and non-disclosure provisions in employment agreements, confidentiality agreements, and separation or settlement agreements should carefully review such documents to ensure compliance with applicable state and/or federal law.