Effective Immediately – Federal Prohibition on Nondisclosure and Nondisparagement Clauses in Pre-Dispute Agreements Regarding Sexual Harassment and Sexual Assault Enacted
On December 7, 2022, President Joe Biden signed the Speak Out Act (the “Act”), which prohibits pre-dispute nondisclosure and nondisparagement clauses with respect to sexual assault or sexual harassment claims. The Act is effective immediately and applies to agreements between employers and prospective employees, current employees, former employees, and independent contractors.
Pursuant to the Act, pre-dispute “nondisclosure clauses” and “nondisparagement clauses” relating to disputes involving “sexual assault” and “sexual harassment” are now unenforceable. The Act defines these terms as follows:
- 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 of the contract or agreement.”
- A “nondisparagement” 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” is defined as a “dispute involving a nonconsensual sexual act or sexual contact” as defined under federal, state, or tribal law, including “when the victim lacks capacity to consent.”
- A “sexual harassment dispute” is defined as a “dispute relating to conduct that is alleged to constitute sexual harassment” under federal, state, or tribal law.
As noted above, the Act applies only to agreements that are entered into on a pre-dispute basis (i.e., before a sexual assault or sexual harassment dispute arises). Therefore, the Act does not apply to settlement agreements that resolve asserted sexual harassment or sexual assault claims. Further, the Act applies to sexual assault and sexual harassment claims that arise on or after December 7, 2022 and, therefore, does not apply retroactively.
The Act explicitly states that it will not supersede more protective state law governing nondisclosure and nondisparagement agreements. Therefore, employers should be wary of any more protective applicable state law before including such clauses in any contracts. For example, this law will not greatly impact New Jersey employers as New Jersey law already prohibits the inclusion of nondisclosure provisions in any settlement or employment agreement that precludes employees from discussing discrimination, harassment, and retaliation claims. Additionally, New York bans nondisclosure agreements in discrimination, harassment, and retaliation cases, except when the alleged victim of such conduct prefers such an agreement.
The Act is the latest federal action on combatting sexual harassment and sexual assault in the workplace. As we previously reported, on March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 into law, which rendered pre-dispute mandatory arbitration clauses for sexual assault and sexual harassment invalid.
Employers should carefully review the requirements of the Act with counsel and update their template employment agreements accordingly.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.