The Federal “Speak Out Act” Prohibits Certain NDA Clauses Associated with Sexual Assault and Harassment

On December 7, 2022, President Biden signed the Speak Out Act into law. The law takes effect immediately and it limits the enforceability of pre-dispute nondisclosure and non-disparagement provisions relating to disputes involving sexual assault and sexual harassment. Thus, agreements in which employees agree to keep confidential any future sexual assault or harassment claims arising within their employment are unenforceable under the Act, as are general nondisparagement covenants to the extent they would limit an employee’s ability to comment on a sexual harassment dispute or a sexual assault dispute.

Employers should keep in mind, however, that in many jurisdictions there are already certain limits to nondisclosure provisions relating to claims of sexual harassment. For instance, Section 5-336 of the New York General Obligations Law prohibits employers from requiring a nondisclosure provision in any settlement agreement resolving claims of discrimination unless the condition of confidentiality is the complainant’s preference. Further, most employers only utilize nondisparagement and nondisclosure provisions arising or relating to sexual harassment in the context of a settlement or separation agreement, after a dispute arises. Thus, it is unlikely that the federal law signed by Biden, which prohibits pre-dispute agreements, would be triggered often for sexual harassment or assault matters.

Employers who may have questions about whether any nondisparagement and nondisclosure agreements currently utilized by their businesses violate the Speak Out Act should consult counsel, to ensure that their standard template documents are still compliant in view of this new law.