On December 7, 2022, President Biden signed the “Speak Out Act” into law. The Act, which was introduced by Senator Kirsten Gillibrand, passed with bipartisan support. The Act is the second law this year designed to address certain of the concerns raised by the #MeToo movement. Legislation prohibiting forced arbitration provisions in sexual harassment and sexual assault cases went into effect earlier this year. The Act invalidates non-disclosure and non-disparagement provisions in workplace contracts prior to a dispute involving allegations of sexual harassment and/or sexual assault.
Under the Act, a non-disclosure clause (commonly referred to as a “NDA”) is defined as a provision that forbids the parties to the contract from discussing conduct, a settlement related to conduct, or information covered by the terms of the contract. And a non-disparagement clause is defined as a provision that prohibits one or more parties to a contract from making a negative statement about another party that relates to the contract, agreement, claim, or case.
The law applies to any claim filed under federal, state or tribal law as of the enactment date. Local or state law against the use of NDAs to prohibit disclosure of sexual harassment or sexual assault disputes will remain in effect.
States with NDA Laws
To date, several states have already passed legislation that voids NDAs for various workplace disputes. Three state laws are profiled briefly below:
- California’s “Silenced No More Act” (S.B. 331) became effective on January 1, 2022. The law expands restrictions on NDAs that were initially implemented in the state’s 2018 “Stand Together Against Non-disclosure” (“STAND”) Act (S.B. 820). The 2018 bill prohibited NDAs that prevent employees from disclosing factual information about specific acts related to claims filed in court or with an administrative agency in settlements of sexual harassment and gender discrimination claims. But the new state law covers more workplace disputes including claims of harassment, discrimination, and retaliation. The new law prohibits an employer from including language in agreements or contracts that would ban an employee from disclosing allegations of such workplace disputes.
- New Jersey
- In 2019, New Jersey’s governor signed legislation (S. 121) that renders unenforceable any provision in employment contracts and settlement agreements that have “the purpose or effect of concealing the details relating to a claim of discrimination, retaliation or harassment.” It also bans provisions in employment agreements that waive any right to claims based on discrimination, harassment or retaliation.
- Washington’s “Silenced No More Act” prohibits non-disclosure and non-disparagement provisions that prevent an employee from disclosing or discussing conduct the individual reasonably believes to be illegal acts of discrimination, harassment, retaliation, wage and hour violations, sexual assault, or other conduct recognized as being against a clear mandate of public policy.
Importance for Employers
The “Speak Out Act” applies to the enforceability of pre-dispute NDAs. Notably NDAs and non-disparagement contract provisions that are entered into after a claim or dispute actually arises (as part of a settlement agreement, for example) remain enforceable. Furthermore, NDAs are still enforceable for the protection of trade secret or proprietary information. While this law addresses sexual harassment disputes, legislators and advocates are actively working to secure the same restrictions for pre-dispute NDAs with respect to other workplace disputes, including age, race, and gender discrimination claims.
Employers are advised to review their employment agreements and settlement agreements to ensure compliance with the Act. If you have any questions regarding this new law, please contact your labor and employment counsel at Smith, Gambrell & Russell, LLP.