On December 7, 2022, President Joe Biden (“President Biden”) signed the Speak Out Act (“The Act”), which bans the use of pre-dispute, non-disclosure and non-disparagement contract clauses involving sexual assault and sexual harassment claims. The Act applies to agreements between employers, current employees, former employees and independent contractors.
Pursuant to The Act, a non-disclosure clause is defined 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.” A non-disparagement clause is defined as “a provision in a contract or agreement that requires one 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.” The Act provides: “with respect to a sexual assault dispute or sexual harassment dispute, no non-disclosure clause or non-disparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which the conduct is alleged to have violated Federal, Tribal, or State law.”
Although the Act limits the use of these provisions, it does not prohibit the use of these agreements completely. The Speak Out Act exclusively bans pre-dispute, non-disclosure and non-disparagement agreements and does not apply to post-dispute agreements. The Act also does not apply to trade secrets, proprietary information or other employee complaints such as wage theft, age discrimination or race discrimination. The Act applies only to claims filed on or after December 7, 2022.
Employers should carefully review their non-disparagement and non-disclosure provisions in their employment, arbitration and confidentiality agreements to ensure these agreements are tailored appropriately. Further, employers should act carefully prior to utilizing non-disclosure or non-disparagement agreements when resolving instances of potential misconduct that have not yet become a formal dispute. The Act does not formally define the term “dispute”. As such, employers should keep themselves apprised of the ongoing developments regarding these agreements and how this effects their workplace requirements.