New Non-Disclosure and Non-Disparagement Restrictions – “Me Too” Movement’s Continued Impact on the Workplace!

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January 5, 2023

The Speak Out Act (“Act”) became law on December 7, 2022.  The Act prohibits the enforcement of non-disclosure or non-disparagement provisions which are agreed to prior to an allegation of sexual assault or sexual harassment (“sexual misconduct”).  The Act applies to disputes regarding alleged sexual misconduct that occur after December 7, 2022.  A full version of the Act can be found here.

“Me Too” Motivations

By enacting the Act, Congress’s goal is to “empower survivors to come forward, hold perpetrators accountable for abuse, improve transparency around illegal conduct, enable the pursuit of justice, and make workplaces safer and more productive for everyone.”  Within Section 2 of the Act, Congress lays out its finding about the pervasive problem of sexual harassment in the workplace and determined that “[i]n order to combat sexual harassment and assault, it is essential that victims and survivors have the freedom to report and publicly disclose their abuse.”

This law follows the enactment of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which amended the Federal Arbitration Act (the “Amendment”) passed earlier in 2022.  The Amendment prohibits the enforcement of any pre-dispute arbitration agreement or joint-action waiver relating to sexual assault or sexual harassment disputes if the alleged victim chooses to file their claim in court.

So, what does this mean?

The Act states “no nondisclosure clause or non-disparagement clause agreed to before the dispute arises shall be judicially enforceable.”  The dispute referred to is a sexual misconduct dispute, and based on the language of the Act, a dispute arises once an individual asserts an allegation of sexual misconduct.

Employers should be aware that now a blanket non-disclosure or non-disparagement provision contained in agreements such as an employment agreement, confidentiality agreement, or non-compete agreement will not be enforced against a person alleging sexual misconduct if the alleged sexual misconduct occurred after the execution of the agreement.

However, the Act does not affect agreements signed as part of the dispute.  Once an employee alleges sexual misconduct, a non-disclosure and/or a non-disparagement provision can be included in a settlement agreement and release related to the current allegations.

The Act’s restrictions are focused on disputes related to sexual misconduct and will not affect non-disclosure or non-disparagement provisions related to other matters (i.e., trade secrets).

What should you do?

Employers should review form agreements signed by employees at the beginning of employment to ensure compliance with the Act.  Employers should also review form separation agreements, settlement agreements, and releases to ensure the scope does not include future sexual harassment or sexual assault claims.

As always, if you have questions, please contact your Ruder Ware employment law attorney for assistance.

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