Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
Amidst the flurry of activity taking place before the end of the 117th U.S. Congress, the House of Representatives quietly passed the Speak Out Act on November 16, 2022, by an overwhelming majority. The bill previously passed the U.S. Senate in September and President Biden signed it into law on December 7, 2022.
The new law renders unenforceable non-disclosure and non-disparagement clauses related to allegations of sexual assault and/or sexual harassment and that are entered into “before the dispute arises.” The use of the phrase “before the dispute arises” is critical: prior versions of this bill provided that a non-disclosure or non-disparagement agreement would be unenforceable if the agreement was entered into “before a lawsuit is filed.” The change in language suggests that Congress was mindful of the concern expressed by many that the earlier version would have disincentivized an employer from resolving any complaint raised quickly and effectively, before a “lawsuit” was filed, because it would be unable to bargain for non-disclosure or non-disparagement clauses as a means of resolving the complaint (in the harassment context, this is particularly noteworthy, insofar as under federal civil rights laws and many state law analogues, an individual must first file a charge with an administrative agency, and it may be years before a “lawsuit” is filed).
Under the language of the law as enacted, it appears clear that once an allegation of sexual assault and/or sexual harassment is made, a dispute has arisen. Therefore, employers likely can continue to include enforceable non-disclosure and non-disparagement clauses in agreements resolving allegations of sexual harassment (or, in the more egregious cases, sexual assault). In light of the new law, however, an employer will not be able to enforce blanket non-disclosure and/or non-disparagement provisions in a sexual harassment or sexual assault situation, if the provision was entered into prior to an allegation of sexual harassment or sexual assault having been being made. This seems in line with the intent of the bill, which was understood to be aimed at preventing “Me Too” scenarios where alleged victims of sexual harassment or assault were limited in their ability to come forward publicly with their allegations.
The Speak Out Act is another step in efforts around the country to limit the use and/or enforcement of confidentiality and non-disparagement clauses in settlement agreements. A number of states and localities have passed laws over the last few years curtailing the restrictions that can be included in agreements resolving allegations of sexual assault and/or harassment, including California, New Jersey, New York, Oregon, and Virginia, among others. The national Speak Out Act follows on the heels of the federal government’s enactment earlier this year of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which bans pre-dispute arbitration agreements and joint-action waivers covering sexual assault or sexual harassment disputes.
Employers should review their employment agreements, confidentiality agreements, arbitration agreements, and employee handbooks and policies to ensure compliance with the Speak Out Act, and the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, as well as applicable state and local laws. In addition, employers should review their template and form separation agreements and releases to ensure that confidentiality and non-disparagement provisions do not prohibit the disclosure of future sexual harassment or sexual assault claims or disputes that have not yet arisen.1 While employers may not be penalized for including non-disparagement or non-disclosure provisions in these documents, they may find that they are not enforceable if they are found to be overbroad and not carefully tailored to the Speak Out Act’s limitations.
1 Littler’s practice group on releases has developed sample language to accomplish this goal and is prepared to assist employers with this task.