On Wednesday December 7, President Biden signed the “Speak Out Act” into law. The Act makes pre-dispute non-disclosure and non-disparagement clauses covering sexual harassment or sexual assault allegations unenforceable in court.  The Act is intended to broadly apply to nondisclosure and nondisparagement provisions in agreements between “employers and current, former, and prospective employees, and independent contracts, and between providers of goods and services and consumers.” Speak Out Act, Senate Bill 4524, 117^th Cong. (2022).  It applies to existing agreements as well as those entered into in the future.

Two types of pre-dispute clauses are now judicially unenforceable: nondisclosure and nondisparagement clauses covering sexual assault or sexual harassment disputes.  The Act defines a nondisparagement clause as a provision that prohibits a party to a contract from making negative statements about another party that relates to the contract, agreement, claim, or case.  The Act defines a nondisclosure clause as a provision in a contract or agreement that prohibits parties from disclosing or discussing the disputed conduct, the existence of a settlement involving the disputed conduct, or information covering the terms and conditions of the contract or agreement.  These clauses are only unenforceable when they (a) are included in an agreement before a dispute arises, and (b) involve sexual assault or sexual harassment disputes.

This means employers who want to have their employees or independent contractors sign nondisclosure and nondisparagement provisions can continue to do so as long as they carve out sexual assault and sexual harassment disputes and do not otherwise violate state law.  The Act does not prohibit employers or other parties from including nondisparagement and nondisclosure provisions covering sexual assault and sexual harassment allegations in a negotiated settlement agreement after a dispute arises.

The Speak Out Act follows passage of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, signed on March 3, 2022, which gives employees the option to opt out of pre-dispute arbitration agreements covering sexual assault and sexual harassment claims.[1]

[1] For more information on the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, see our prior alert.