President Biden Signs “Speak Out Act” Limiting the Enforceability of Non-Disclosure and Non-Disparagement Provisions in Sexual Harassment Cases

On December 7, 2022, President Biden signed the Talk Out Act (the “Act”) into legislation. The Act boundaries the enforceability of pre-dispute non-disclosure and non-disparagement clauses relating to sexual assault and sexual harassment statements, but does not prohibit this kind of provisions in settlement agreements or severance agreements.

Scope

The Act prohibits the enforcement of non-disclosure agreements (NDAs) and non-disparagement clauses concerning businesses and workforce and unbiased contractors, and involving products and products and services providers and people, that were in area in advance of a sexual assault or harassment dispute occurs. In its Assertion of Administration Policy, the Biden Administration famous that NDAs can “silence survivors, even though shielding and permitting perpetrators to continue abusive behavior.”

The Act defines a non-disclosure clause as a “provision in a agreement or agreement that demands the get-togethers to the agreement or agreement not to disclose or talk about conduct, the existence of a settlement involving perform, or facts protected by the terms and conditions of the deal or arrangement.” It similarly defines a non-disparagement clause as “a provision in a contract or settlement that requires 1 or additional events to the agreement or agreement not to make a unfavorable statement about yet another bash that relates to the agreement, settlement, declare, or case.” The Act defines a sexual assault dispute as a dispute involving “a nonconsensual sexual act or sexual conduct” as individuals conditions are defined by federal, point out, or tribal law. In the same way, a sexual harassment dispute is described as a dispute associated to carry out that is alleged to constitute sexual harassment beneath federal, point out, or tribal regulation.

Influence

In observe, the Act will probable have limited affect as it incorporates a range of limits. Most significantly, the Act applies only to non-disclosure and non-disparagement clauses in agreements entered into prior to a sexual assault or sexual harassment “dispute” arises. It does not impression NDAs and non-disparagement provisions in agreements that events enter into soon after a dispute occurs. Consequently, separation and settlement agreements entered into right after an staff can make a assert alleging sexual assault or harassment are not impacted. Additionally, most pre-dispute nondisclosure and confidentiality agreements are made to avert the foreseeable future use or disclosure of proprietary info and trade secrets and techniques, not to avert disclosure of sexual assault and harassment. The Act does not effects the means of employers to defend trade insider secrets and proprietary information, expressly carving out confidentiality and nondisclosure provisions supposed to guard these details. 

Takeaways

The Act is element of a continuing development by the federal authorities to shield victims of sexual assault and harassment by making it possible for them to discuss publicly about their experiences. As we earlier documented, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, signed into regulation on March 3, 2022, amended the Federal Arbitration Act (FAA) to make pre-dispute arbitration agreements for sexual assault and harassment statements invalid and unenforceable.

When the Act’s scope is now confined, the Biden Administration expressed its motivation to broaden the Act. Exclusively, the Biden Administration declared that it “looks ahead to continuing to work with Congress to advance broader laws that addresses the assortment of problems implicated in NDAs and non-disparagement clauses, including those similar to discrimination on the foundation of race, unfair labor methods, and other violations.” In addition, more than a dozen states have enacted similar legislation. Some of these point out legislation, like people in Washington and California, limit non-disclosure and non-disparagement provisions additional broadly than the Act. As a result, businesses in these states will require to comply with the broader prerequisites imposed by applicable condition regulation.

California’s SB 331, recognized as the Silenced No A lot more Act, is significantly broader than the federal Act. SB 331 prohibits confidentiality provisions in settlement and separation agreements involving claims of workplace harassment or discrimination on any protected basis, not just all those based on sexual assault and sexual harassment. SB 331 also prohibits businesses from including non-disparagement provisions that ban personnel from disclosing information about any kind of harassment or discrimination or other conduct that an employee fairly believes is unlawful, in exchange for a marketing, bonus, or continued employment, except if the agreements include precise carveout language. Importantly, SB 331 is not minimal to pre-dispute agreements, and expressly applies to settlement and separation agreements, which are not impacted by the federal Act. You can browse our prior blog write-up on SB 331 in this article.

How Should Employers Respond?

In mild of the federal and point out legislation tendencies to shield victims of sexual harassment and sexual assault, businesses who include non-disparagement and non-disclosure provisions in employment agreements, confidentiality agreements, and separation or settlement agreements really should thoroughly assessment these paperwork to make certain compliance with relevant point out and/or federal law.