The use of non-disclosure and non-disparagement agreements to forbid employees from “speaking out” about certain workplace misconduct has recently been greatly restricted. On December 7, 2022, President Biden signed into law the Speak Out Act, which renders unenforceable non-disclosure and non-disparagement provisions related to allegations of sexual harassment and/or sexual assault. The Speak Out Act is another example of political leaders addressing the “Me Too” movement and the workplace repercussions that followed the inception of the movement. In short, the Speak Out Act is designed to prohibit employers from using non-disclosure and non-disparagement agreements to conceal acts of sexual harassment and/or sexual assault in the workplace.
Specifically, the Speak Out Act applies to any non-disclosure or non-disparagement agreement that is entered into “before [a] dispute arises” involving sexual harassment or sexual assault. In other words, if an employer takes preemptive action and has an employee execute a non-disclosure or non-disparagement agreement prior to the employee raising allegations of sexual harassment or assault, those provisions are unenforceable as a matter of law. For example, if an employer has an employee execute a broad non-disclosure agreement at the inception of their employment, and the employee later makes a claim of sexual harassment or assault, the employer is prohibited from using the non-disclosure agreement as a hammer to prevent the employee from discussing or disclosing their allegations of sexual harassment or assault. With that said, if an employee raises an internal complaint or allegation of sexual harassment or assault, or even files a charge of discrimination with the Equal Employment Opportunity Commission, the employer should be able to resolve the complaint and negotiate and include a non-disclosure or non-disparagement provision as part of the settlement.
The Speak Out Act clearly applies to any non-disclosure or non-disparagement agreement entered into on or after December 7, 2022. What is less than clear is whether it also applies to non-disclosure or non-disparagement provisions entered into prior to December 7, 2022. Tiger Woods is currently dealing with this very issue as his ex-girlfriend executed a non-disclosure agreement during their relationship, likely before December 7, 2022, and she is claiming Mr. Woods cannot enforce it because it was entered into prior to her raising claims of sexual harassment and/or assault. While there is no legal guidance on the Speak Out Act’s impact on non-disclosure and non-disparagement agreements entered into prior to December 7, 2022, an analogous piece of legislation offers some guidance on how courts will address this issue. Indeed, a similar issue arose under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which prohibits the use of mandatory arbitration provisions with respect to claims of sexual assault and/or harassment, and the courts that have addressed whether it impacted arbitration agreements entered into prior to the enactment of the Act held that it did not. Based on this legal authority, there is a good faith argument that the Speak Out Act does not apply to non-disclosure or non-disparagement agreements entered into prior to December 7, 2022.
Importantly, the Speak Out Act does not impact other provisions in employment agreements or similar documents that include non-disclosure or non-disparagement provisions, nor does it prohibit an employer from using confidentiality and non-disclosure agreements to protects its trade secrets and other confidential and proprietary business information or to prohibit an employee from disclosing other employment related matters. Employers should, however, review their current employment agreements, confidentiality agreements and employee handbooks and polices to ensure compliance with the Speak Out Act.
If you have questions regarding non-disclosure and non-disparagement agreements, contact Allen Hutson or another member of the Labor & Employment Practice Group.