On November 16, 2022, the House passed the Speak Out Act with bipartisan support, following the Senate’s approval of the bill in September. President Biden signed the bill into law on December 7, 2022; it is effective immediately. The Act prohibits the enforcement of certain non-disclosure and non-disparagement agreements that prohibit employees from disclosing information related to workplace sexual harassment or sexual assault.
This law follows on the heels of a federal law passed earlier this year that limited employers’ use of arbitration agreements in sexual assault and sexual harassment disputes. The Speak Out Act is the latest example of the rapidly changing employment law landscape that employers must keep up with.
The specifics of the law
The law applies broadly to all employers in the country, and renders unenforceable a pre-dispute non-disclosure or non-disparagement agreement that prohibits an employee from disclosing facts about a sexual harassment or sexual assault dispute. The law’s prohibition reads:
With respect to a sexual assault dispute or sexual harassment dispute, no nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated Federal, Tribal, or State law.
The “pre-dispute” qualifier is important because it means that an employer and employee can still agree to enter an NDA covered by the law, for example, as part of a settlement agreement after a sexual harassment or sexual assault dispute arises. But employers can no longer have employees sign agreements at the outset of employment, as is common, that would prohibit the employees from disclosing information related to workplace sexual harassment or sexual assault.
The law will “apply with respect to a claim that is filed under Federal, State, or Tribal law.” In effect, this will invalidate many NDAs and non-disparagement agreements signed before the enactment of the law. If an employer files a lawsuit to enforce an NDA that violates the law, the NDA will be unenforceable even if the NDA was signed several years ago.
What does this mean for your employment agreements?
If, like many employers, you require employees to sign NDAs at the outset of employment that prohibit them from disclosing information about workplace sexual harassment and sexual assault, your agreements will violate the Speak Out Act. Review your form agreements to ensure that they don’t include overly-broad NDAs under the Act.
Also remember that you may have NDAs with current employees that violate the terms of the new law. You should never seek to enforce an NDA—even one entered into prior the passage of the Act—to stop an employee from disclosing facts about sexual harassment or sexual assault in the workplace. It will be unenforceable under the new law.
In addition to the Speak Out Act, don’t forget about the increasing patchwork of state laws that limit employee NDAs. Many states have laws that go further than the new federal law and place more severe restrictions on NDAs. For instance, may states prohibit NDAs that limit an employee’s ability to speak freely about any workplace discrimination—not just sexual harassment or sexual assault. Ensure that your NDAs comply with both the new federal law and the law over every state where you have employees.
SixFifty solutions
SixFifty can help! Our Employment Agreements tool gives users the option of including an NDA in an employee contract, and we also offer a stand-alone NDA generator. Our NDA tools take account of state-specific limitations on NDAs, and will include the new federal limitations as soon as the Speak Out Act is signed into law.
With our Employee Handbook tool, you can customize your employee handbook to meet the current and future needs of your business. We are continuously monitoring this dynamic area of the law and updating our tools with changes in real time. Working with SixFifty is like having the best employment lawyer in the world by your side.
If you are ready to get started or have any questions, schedule a demo with SixFifty today!
