No More Non-Disclosure and Non-Disparagement Clauses in Pre-Dispute Agreements Involving Sexual Harassment and Sexual Assault

On December 9, 2022, President Biden signed the “Speak Out Act” (the Act). The Act follows the enactment of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which made pre-dispute arbitration agreements for sexual assault and sexual harassment claims invalid and unenforceable. The Act is similar to laws passed in California, Illinois, New Jersey, and New York in response to the #MeToo Movement. The Act became effective upon the President’s signature.

Definitions

Under the Act:

  • a nondisclosure clause means 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, including those signed before.
  • a non-disparagement clause means a provision in a contract or agreement that requires one 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.
  • a sexual assault dispute means a dispute involving a nonconsensual sexual act or sexual contact, under Federal, State or Tribal law, including when the victim lacks the capacity to consent.
  • a sexual harassment dispute means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.

Covered Agreements

The Act applies only to nondisclosure and non-disparagement clauses in agreements entered into before a sexual assault or sexual harassment dispute started. Although the Act covers all agreements including ones signed prior to its effective date, it only applies to claims arising after its effective date.

Trade secrets and proprietary information are not covered under the Act. Furthermore, settlement agreements resolving claims are not covered under the Act.

The Law

The Act renders unenforceable pre-dispute nondisclosure and non-disparagement clauses relating to disputes involving sexual assault and sexual harassment.

Conclusion

Although the Act’s scope is limited, employers who include non-disparagement and nondisclosure provisions in their standard employment agreements should carefully review such documents and include carveouts for sexual harassment and sexual assault to ensure they do not violate the Act.

Please check LaborSphere for updates as we continue to monitor this space.

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