The Speak Out Act Will Limit Enforceability of Confidentiality and Nondisparagement Clauses
On November 16, 2022, the US House of Representatives passed the Speak Out Act, after the US Senate unanimously passed the Act in September 2022. The Act will head next to President Biden’s desk, where he is expected to sign it into law.
The Act limits “judicial enforceability of predispute nondisclosure and nondisparagement contract clauses” in the realm of sexual assault and sexual harassment disputes. In other words, contract clauses that force a signatory to stay quiet about future instances of sexual assault or harassment will no longer be enforceable. This likely impacts pre-dispute agreements signed by employees as a condition of employment.
Background & Significance
Congress passed the Act after finding that millions of Americans are affected by sexual harassment and assault, particularly in the workplace. According to the Act, 81% of women and 43% of men have experienced sexual harassment or assault during their lifetime, and while one in three women has experienced such harassment in the workplace, as little as 6% report these experiences. As such, it is imperative that survivors are able to report and publicly disclose their abuse, which is often curtailed by nondisclosure and nondisparagement clauses in contracts. Accordingly, the Act frees up survivors’ pathways for reporting by rendering these clauses invalid.
The Act extends not only to survivors of sexual assault or harassment, but will allow those with knowledge of these occurrences to report them as well. While some states already have similar laws, such as Maine’s Act Concerning Nondisclosure Agreements in Employment, which prohibits employers from requiring agreements that prevent employees from disclosing or discussing discrimination, the Speak Out Act broadly applies under federal, state, or tribal law.
Despite the Act receiving bipartisan support, critics have noted that the Act only addresses “predispute” contract clauses, meaning that it does not address nondisclosure or nondisparagement agreements that arise after a dispute has begun, such as settlement agreements. Nevertheless, passage of the Act is an important step towards redressing sexual assault and harassment, particularly in the workplace context. Some states, such as New York and Illinois, preclude post-dispute nondisclosure provisions unless the employee seeks such a clause.
Next Steps for Employers
Employers should revise their employee confidentiality and nondisclosure agreements to comply with the Act. In addition, employers need to be aware of the enactment of post-dispute limitations on confidentiality and nondisclosure clauses in settlement agreements in certain states, a trend which may spread to other jurisdictions.