On Dec. 7, 2022, President Joe Biden signed into law the Speak Out Act, which affects the use of pre-dispute non-disclosure and non-disparagement provisions in certain circumstances. Generally, the Speak Out Act renders unenforceable non-disclosure and non-disparagement provisions that prohibit or restrict an individual’s ability to disclose or otherwise discuss alleged instances of sexual harassment and/or sexual assault. It is intended to prohibit employers (and others) from using non-disclosure and non-disparagement agreements to conceal this type of unlawful conduct.
The Speak Out Act specifically applies to any non-disclosure or non-disparagement agreement entered into “before [a] dispute arises” involving sexual harassment or sexual assault. In other words, if an employer 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 beginning of their employment and the employee later claims sexual harassment or assault, the employer is prohibited from using the non-disclosure agreement as a means of preventing the employee from reporting or discussing the allegations. However, if an employee raises an internal complaint or allegation of sexual harassment or assault, or files a charge of discrimination with the Equal Employment Opportunity Commission, the employer should be able to resolve the complaint and negotiate the inclusion of a non-disclosure or non-disparagement provision as part of the settlement because the agreement was entered into after the dispute arose.
The Speak Out Act strictly applies to any non-disclosure or non-disparagement agreement entered into on or after Dec. 7, 2022. What is less than clear is whether it also applies to non-disclosure or non-disparagement provisions entered into before that date.
While there is no official legal guidance on the Speak Out Act’s effect on non-disclosure and non-disparagement agreements entered into before Dec. 7, 2022, an analogous piece of legislation offers guidance on how courts will address this issue. A similar issue has arisen 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 courts have held that it did not affect arbitration agreements entered into before the Act’s passage. As a result, there is a good faith argument that the Speak Out Act does not apply to non-disclosure or non-disparagement agreements entered into before Dec. 7, 2022.
The Speak Out Act does not affect 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 safeguard trade secrets and other confidential or proprietary business information. It is important to note that the National Labor Relations Board has recently issued an opinion that may affect the use of non-disparagement, non-disclosure and confidentiality agreements which is not covered in this article.
Employers should review their current employment agreements, confidentiality agreements and employee handbooks to ensure compliance with the Speak Out Act. In keeping with human resources best practices, corporate policies should outline how harassment issues should be handled, with clear reporting procedures for employees.
* This article first appeared in The Journal Record on April 28, 2023, and is reproduced with permission from the publisher.