Aiming to improve transparency around illegal conduct in the workplace, the U.S. Congress has enacted a new law, the Speak Out Act, that renders certain nondisclosure and nondisparagement agreements unenforceable. President Joe Biden signed the Speak Out Act into law on Dec. 7, 2022.
Contract Enforcement Prohibition
In general, the Speak Out Act prohibits courts from enforcing any contract that prevents an individual from talking about workplace sexual harassment or assault during a dispute that arose after the contract was made.
In other words, the new law makes it impossible for employers to use prior agreements to stop individuals from raising or disclosing information about a current or future sexual harassment or assault claim.
Affected Contracts
The Speak Out Act applies to:
- Any contractå between an employer and an applicant, employee, former employee or independent contractor; and
- All contracts made between consumers and providers of goods and services.
Employer Impact
Employers should keep in mind that the new law only applies to agreements made “before the dispute arises.” Thus, it does not affect an employer’s ability to enforce nondisclosure or nondisparagement provisions contained in agreements made to settle a dispute.
However, employers should be aware that state or local laws may limit their ability to include these provisions in a post-dispute contract.
The Speak Out Act prohibits courts from enforcing pre-dispute agreements not to disclose information about workplace sexual harassment or assault.
Important Information
Pre-dispute Agreements
Employers facing sexual harassment or assault claims may not rely on prior nondisclosure or nondisparagement agreements to silence employees about that conduct.
Post-dispute Agreements
The Speak Out Act does not affect nondisparagement or nondisclosure provisions in agreements that are entered into after the dispute arose.
This Legal Update is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2022 Zywave, Inc. All rights reserved.
