U.S. Senate Passes the Speak Out Act

On September 29, 2022, the U.S. Senate unanimously passed the Speak Out Act, a bill that, if enacted, would limit the enforceability of nondisclosure and nondisparagement clauses in pre-dispute agreements for disputes involving sexual harassment and assault.   

The bill defines a “nondisclosure agreement” as “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.” It further defines a “nondisparagment clause” as “a provision in a contract or agreement that requires 1 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.”

If the Speak Out Act is enacted, in disputes relating to sexual harassment or sexual assault, nondisclosure clauses or nondisparagement clauses agreed to before the dispute arises would not be enforceable when the harassment or assault at issue is alleged to have violated Federal, Tribal, or State law.

Notably, the bill would not impact the enforceability of an agreement to not disclose the facts of a sexual harassment or sexual assault claim if the agreement is signed after the claim arises. The bill would limit the enforceability of such contract provisions in both the employment context and other contractual relationships, including contracts with independent contractors and the providers of goods and services, likely a reflection of the Senate’s intent to cover a wide range of contractual relationships.

The bill is currently being considered in the House and will we continue to monitor for updates.

The bipartisan bill would be the second of its kind this year. As we reported in a previous alert, on March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which prohibits the forced arbitration of disputes involving sexual assault or sexual harassment.

Though the Speak Out Act has not yet been enacted, employers should be mindful of existing state and local laws that restrict employers from requiring employees to sign non-disparagement and nondisclosure agreements related to future claims of sexual harassment or discrimination. For example, under existing New York law, if an employer requires an employee to sign an agreement that prevents the disclosure of factual information related to any future claim of discrimination, the agreement must also state that the employee is not prohibited from speaking with law enforcement, the EEOC, the New York State Division of Human Rights, a local commission on human rights, or an attorney retained by the employee. The same New York State law also requires that employers follow a specific process—requiring a separate agreement, a 21-day waiting period, and a 7-day revocation period—to enter into a settlement agreement or other resolution of a discrimination claim that contains a confidentiality agreement.

We will continue to monitor the status of the pending legislation. If you have any questions about how the pending legislation, or existing state and local law, may impact your employment agreements, non-disclosure agreements, or separation agreements, please contact Kate Townley at ktownley@fglawllc.com or any other attorney at the Firm.

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