On December 7, 2022, Congress passed the “Speak Out Act” (the “Act”), which codified into federal law limits on what types of information employers are allowed to include in nondisclosure or non-disparagement clauses. Specifically, under the Act, employers are now prohibited from requiring employees to sign pre-dispute agreements that contain nondisclosure clauses or non-disparagement clauses that would have the effect of silencing employees concerning claims of sexual harassment or sexual assault. However, while aimed at preventing “Me Too” situations, the Act does not require confidentiality and non-disparagement clauses to expressly provide that they do not prohibit employees from speaking out against sexual harassment or sexual assault, meaning these contracts may still silence employees.
At first glance, the law may seem like an unnecessary measure. Plenty of employee handbook policies require employees to report sexual harassment/abuse and prohibit retaliation for doing so. However, such mandatory reporting policies become blurred when employees are also required to sign confidentiality, nondisclosure, non-disparagement, and similar agreements that prohibit them from discussing certain topics about the business since these topics could indeed be interpreted to include claims of sexual harassment or sexual assault.
Now, under the Act, such agreements violate federal law. Importantly, this does not mean employee confidentiality and non-disparagement agreements are prohibited. On the contrary, the Act is clear that such agreements are allowed and still a critical tool for protecting company trade secrets and proprietary information; they just cannot be used to curtail speech related to claims of sexual harassment or sexual assault. (Note, the Act does not say “confidential information”; it says “trade secrets or proprietary information.”)
Also noteworthy, the Act does not apply to post-dispute agreements, such as settlement agreements entered into after an employee raises a sexual assault or sexual harassment allegation. For example, the Act would not prohibit an employee and employer from entering into a settlement agreement after an employee has registered a sexual harassment complaint to a company’s human resources department.
Finally, the Act does not prohibit federal, state, or local laws that regulate nondisclosure and non-disparagement clauses so long as those laws are as protective or more protective than the Act’s protections. This means that more protective measures on the books in California, New Jew Jersey, New York, Oregon, and Virginia remain intact.
While a good start, the Act does not go far enough in some respects. Specifically, the Act does not penalize employers for including non-disparagement or nondisclosure provisions in employee agreements, nor does it require such agreements to expressly state that they do not prohibit the employee from discussing or raising claims of sexual harassment or sexual assault. Instead, the Act’s impact is simply that those offending agreements will not be enforceable if they seek to suppress speech about sexual harassment or sexual assault in the workplace. It also means that the issue will have to be prosecuted to have any applicability, forcing victims of sexual harassment and sexual assault to litigate the enforceability of the confidentiality agreement while simultaneously litigating claims of workplace sexual harassment/assault. As such, without more clarity, employees subject to confidentiality agreements will likely be confused about what they can and cannot say when claims of sexual harassment are involved and remain silent.
Employer Takeaways: The Speak Out Act took effect on December 7, 2022, and applies to “claims filed under Federal, State, or Tribal law” after that date. Employers should review their current employee confidentiality agreements and revise them before having any employee sign in the future to ensure they include exceptions to nondisclosure and non-disparagement clauses related to allegations of sexual assault or sexual harassment.
And, since most employers are (or should be) making year-end updates to their employee policies and template contracts, it is probably a good idea to review the more-restrictive state laws and ensure their policies and contracts include all necessary bells and whistles.
About the Author:
Sara H. Jodka (Member, Columbus) is a member of the firm’s labor and employment department and regularly counsels employers and litigates all types of employment-related cases. Sara is the editor of the firm’s All Things HR Blog and the Chair of the Ohio State Bar Association’s Labor and Employment Section Council. She can be reached at 614-744-2943 or SJodka@dickinsonwright.com. Her biography can be viewed here.