Last Wednesday, November 16, 2022, the US Congress passed the S.4524 bill (the “Speak Out Act”) that will limit the use and enforceability of non-disclosure and non-disparagement provisions in pre-dispute agreements with employees and independent contractors relating to sexual harassment and sexual assault allegations. If President Joe Biden signs the bill into law, the bill would render agreements reached before a sexual harassment or sexual assault dispute void and unenforceable in instances where “conduct is alleged to have violated Federal, Tribal, or State law.”
How Will the Speak Out Act Impact Me as an Employer?
President Biden released a letter on November 14, 2022, expressing his support for the bill. Therefore, it is expected that he will sign the bill into law in the upcoming days. So, as an employer, you need to be aware of the following 4 points:
1. The bill covers non-disclosure agreements and non-disparagement clauses in sexual harassment and sexual assault disputes.
If signed into law, the bill will prevent courts from enforcing non-disclosure agreements in disputes where a party is alleging sexual assault or sexual harassment. Furthermore, the law will prohibit the use of non-disparagement provisions in sexual assault or sexual harassment disputes. This refers to a contractual provision that requires any party not to speak negatively about another party that relates to the contract, agreement, claim, or case.
2. The bill only restricts pre-dispute gag orders.
The bill only prevents the enforcement of non-disclosure and non-disparagement provisions in agreements entered into before a dispute arises. Thus, as an employer, you will still be able to enter into post-dispute confidentiality agreements.
3. The bill does not restrict trade secrets or proprietary information protection.
Section 4(d) of the new bill explicitly permits employers to protect trade secrets and proprietary information through non-disclosure agreements: “[n]othing in this Act shall prohibit an employer and an employee from protecting trade secrets or proprietary information.”
4. The bill also covers independent contractors.
The law will apply to “employers and current, former, and prospective employees, and independent contractors”.
To prepare ahead of the bill’s signing into law, you should review any pending pre-dispute agreements to ensure none of them prohibit disclosure of sexual harassment and sexual assault incidents.
MNK Law will continue to monitor developments related to the Speak Out Act and its effect on employers. For more information about the new law and how to best prepare for compliance, please contact us at info@mnklawyers.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.
