On December 7, 2022, President Biden signed the “Speak Out Act” into law. The Act prohibits pre-dispute agreements not to disclose sexual harassment and assault allegations.
Supported by #MeToomovement advocates, and enjoying a level of bipartisan support, the Act is designed to facilitate transparency and to allow victims of sexual harassment to communicate their stories. However, while employers need to be aware of the Act and its requirements, it does not represent a sea change.
First, the Act only applies to non-disclosure and non-disparagement provisions entered into “before the dispute arises.” While the meaning of this phrase likely will be the subject of litigation, it clearly allows such clauses in settlement and severance agreements entered into after a sexual harassment claim (and probably an allegation) has been communicated. This is less restrictive than initial versions of the bill, which only allowed such provisions in agreements after litigation, and the more stringent laws of states such as California, New York, and Illinois (which the Act expressly does not preempt). Ultimately, Congress recognized that requiring actual litigation before allowing such provisions would delay and reduce potential settlements.
Second, existing laws such as the National Labor Relations Act already provides some protection regarding employee speech. In light of such protection, it is questionable whether many employers have been relying on pre-dispute employee handbook and employment contract provisions to muzzle such speech.
Third, unlike an earlier version, the Act does not preclude such non-disclosure and non—disparagement provisions in other civil rights areas, such as race harassment and discrimination.
Finally, the penalty for including an offending provision only appears to be that it is not enforceable.
However, like the federal statute passed earlier this year prohibiting mandatory pre-dispute arbitration of sexual harassment and assault cases, the Speak Out Act carves out sexual harassment/assault for special treatment and places limitations on blanket pre-dispute agreements designed to prevent disclosure.
Employers should review contracts, handbooks and other employment documents, so that they can eliminate pre-dispute non-disparagement and non-disclosure clauses that are applicable to sexual harassment and assault. Employers should also recognize that states such as California, Illinois, and New York impose greater limitations, and be aware that other states may very well follow suit. Finally, to the extent that it is unclear whether “a dispute has arisen,” employers should realize that the enforceability of such confidentiality provisions is subject to attack and consider adding reference to specific sexual harassment allegations in the settlement agreement.
