Speak Out Act Invalidates Sexual Harassment/Assault NDAs

President Biden recently signed the Speak Out Act which became law on December 7, 2022. The Act will free victims of sexual abuse and harassment in the workplace to talk about their experiences.

Receiving bipartisan support, the Act makes pre-dispute nondisclosure and non-disparagement clauses in any employment contract unenforceable across the nation.

This means any agreement signed before an incident has occurred is invalid. The Act allows employers and workers the right to create a non-disclosure or non-disparagement agreement (NDA). They can create this after a claim has been made and settled, but not before.

The Act supersedes laws currently in place. In part, it reads:

‘…no nondisclosure clause or non-disparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated Federal, Tribal, or State law.’

What does the Speak Out Act say?

The bill covers pre-incident claims of sexual harassment or assault in the workplace. It simply allows workers who have been victims of harassment or assault to speak publicly, even if they have signed an NDA prohibiting them from doing so.

The bill does not make NDAs illegal in a criminal sense. However, it voids them and makes them unenforceable in civil matters.

In the past, workers were at risk of being sued by their company if they disclosed information about sexual harassment or assault if they had signed an NDA. The new law invalidates the company’s right to sue, even when existing contracts are in place.

Organizations that currently have these types of NDAs in place aren’t in breach of the law by having them. However, they are no longer enforceable. No court will hear a company’s case if an employee speaks publicly about the harassment.

For some companies, NDAs are blanket contractual agreements. These cover a wealth of legitimate information: company methods and trade secrets, proprietary information, etc.

Under these general agreements, those aspects are still protected, but any disclosure or disparagement about sexual harassment or abuse are no longer valid.

While the Speak Out Act prohibits or invalidates pre-incident NDAs, it does allow for these types of agreements after a dispute has been settled. If, after settling a claim, all parties agree to privacy, and no coercion has occurred, an NDA can be valid.

Before an after-the-incident NDA is signed, many companies will need to consult state or local laws which may be more protective, in order assure its validity. Even if all parties are in agreement, it’s a best practice to get advice of counsel and comply with all local legal mandates.

Shining a light on serial harassment

In the wake of the #MeToo movement, many states and local authorities enacted laws to help protect workers. Many places across the country require mandatory training to recognize and prevent sexual harassment in the workplace.

In some states, all employees must be trained. In others, managers are required to submit to initial and often refresher courses throughout their tenure.

These laws only go so far. For workers who had previously (sometimes as a condition of hire) signed an NDA, contracts prohibited them from discussing their plight.

The Speak Out Act, and others like it, aim to shine a light on harassment and on repeat offenders.

In many companies, these agreements may have resulted in ‘serial harassers.’ These are employees who repeatedly offended in the workplace. However, because of NDAs, they were never exposed and dealt with. Many famous cases, like the Weinstein allegations, included dozens of accusers.

The Speak Out Act, and others like it, aim to shine a light on harassment and on repeat offenders. It puts businesses on notice that confidentiality agreements, either entered into before an incident occurs or after, can no longer shield inappropriate workplace behaviors.

So called ‘forced’ NDAs, which many applicants signed without considering future impact, were standard business procedures in the past. These new laws illustrate how commonly they were used, and how destructive they may have been to workers and businesses.

How common is sexual harassment in the workplace?

The EEOC recently reported nearly 30,000 claims of sexual harassment between 2018 and 2021. With almost 100,000 claims of harassment on any basis, sexual harassment represented more than 25% of charges brought.

The Agency filed 50% more lawsuits in 2018 than it had the year before. In addition, of the cases brought, the agency found a 30% increase in ‘reasonable cause’ determinations over the 2017.

Many suggest the increase in cases is a direct result of awareness brought by the #MeToo movement. However, some estimates suggest 75% of all workplace harassment goes unreported.

The EEOC’s published data outlined more than 55% of complaints received during 2020 were related to retaliation after a report of sexual harassment. The fear or retaliation is a strong deterrent to reporting an incident.

For many, the prospect of demotion, firing, or other harassment should they file a complaint further victimizes the employee. NDAs represented an additional threat to workers. If they spoke about their situation, they were putting themselves at risk of their employer suing them.

Some states go further with similar laws

This new federal legislation mirrors a regulation passed in California in 2018. The STAND (Stand Together Against Non-Disclosure) Act originally prohibited confidentiality provisions for any settlement agreement based on sex.

The state recently expanded the law to include NDAs for all forms of harassment, discrimination, and/or retaliation claims, not just those based on sex.

Several other states including Washington, Maine, and Hawaii have similar laws that prohibit non-disclosure agreements for sexual harassment or assault, as well as most other forms of workplace discrimination.

These new laws, that expand on NDA invalidation beyond sexual harassment cases, may be expanding across the country.

Continuing trend of protecting workers

Earlier this year, Biden also signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act. In support of workers, this bill invalidated mandatory arbitration for sexual harassment and assault.

EFASASHA voided existing contracts and prohibited employers from requiring arbitration in the future. The bill does not prohibit voluntary arbitration, providing there has been no coercion directly at or from either party. It does prohibit any company from forcing an employee to proceed through an arbitration process before they are allowed to file a complaint with an outside agency.

How to comply with the Speak Out Act at your company

To align with the spirit as well as the letter of the Speak Out Act, and any similar state or local legislation, businesses should review any NDAs within their organization.

At minimum, employees should be notified that if they signed any type of non-disclosure or non-disparagement agreement prior to reporting an incident, that agreement is now void with regard to sexual harassment or sexual assault in the workplace.

Communicate with staff members what protections they have under the new law. Also, communicate how they are no longer under threat of legal action if they disclose an incident of sexual harassment or assault.

Check with your local Department of Labor to find if there are more protections, like harassment or discrimination of any kind in your area, and advise staff of their rights.

A best practice may be to revise any current NDAs employees have signed. This could include voiding them entirely and requiring them to sign a new agreement. The new agreement would specifically exclude any instance of sexual harassment or assault.

You may be required or want to include any other type of harassment or discrimination. This depends on the law in your area.

Remind staff members who signed a generic NDA that corporate information is not protected under the Speak Out Act or other legislation. Businesses have a right to protect their proprietary information. Nothing in any state or federal law invalidates that right.

A generalized NDA will continue to protect the secrecy of that information. Only sexual harassment, assault, or other discrimination claims are exempt.

A culture of respect should be the norm for all companies

Sexual harassment in the workplace creates an unprofessional atmosphere of disrespect. Companies can expect lower engagement and higher turnover when they allow sexual or any type of harassment.

When companies require respect of all staff, from the C-suite down, productivity, pride, and ownership are the result. Businesses must be aware that anywhere there are workers, there is a potential for harassment. Even remote staff have can be victims or perpetrators of harassment.

No employee should have to experience harassment. Additionally, no employer should allow it to occur in their workplace. Training, awareness, and prevention strategies are key to a respectful workplace. Transparency, by invalidating sexual harassment NDAs, promotes professionalism in every organization.