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► 'Speak Out Act' Signed Into Law

On December 7, 2022, President Joe Biden signed the Speak Out Act into law. One purpose of the Act is to empower survivors of sexual assault and sexual harassment to come forward by nullifying the enforceability of predispute nondisclosure and nondisparagement contract clauses relating to sexual assault or sexual harassment.

The Act arises out of the #MeToo movement and is evidence that the movement is gaining renewed momentum following a quiet period during the COVID-19 pandemic.

Protecting Survivor Rights

In the Act, Congress made the following findings:

  • Sexual harassment and assault remain pervasive in the workplace and throughout society, affecting millions of Americans;
     
  • 81% of women and 43% of men have experienced some form of sexual harassment or assault throughout their lifetime;
     
  • One in three women has faced sexual harassment in the workplace during her career, and an estimated 87 to 94% of those who experience sexual harassment never file a formal complaint;
     
  • Sexual harassment in the workplace forces many women to leave their occupation or industry or pass up opportunities for advancement;
     
  • To combat sexual harassment and assault, it’s essential that survivors have the freedom to report and disclose their abuse publicly;
     
  • Nondisclosure and nondisparagement provisions in agreements between employers and current, former, and prospective employees and independent contractors—and between providers of goods and services and consumers—can perpetuate illegal conduct by silencing those who are survivors of illegal sexual harassment, assault, or retaliation and those who have knowledge of such conduct, while shielding perpetrators and enabling them to continue their abuse; and
     
  • Prohibiting nondisclosure and nondisparagement clauses will 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.
     

Partial Nullification of These Predispute Clauses

The Act states that, with respect to a sexual assault or sexual harassment dispute, no nondisclosure or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable in instances where conduct is alleged to have violated federal, tribal, or state law.

The law defines “sexual assault dispute” as a dispute involving a nonconsensual sexual act or sexual contact, including when the victim lacks capacity to consent. “Sexual harassment dispute” refers to a dispute relating to conduct that is alleged to constitute sexual harassment under applicable federal, tribal, or state law.

Some employment agreements and independent contractor agreements contain generic nondisclosure or nondisparagement provisions that generally prohibit an employee or contractor from disclosing the employer’s trade secrets and other confidential information or disparaging the employer and its products and services. Those provisions are generally intended to protect an employer against unfair competition, not to prevent an employee or contractor from reporting sexual abuse or harassment.

Proponents of the Act, however, pointed to cases where some employers reportedly used these predispute contract provisions with the purpose of inhibiting or chilling survivor speech rights.

This kind of employer conduct could violate longstanding federal, state, and local fair employment laws that prohibit unlawful discrimination, harassment, and retaliation for the exercise of protected rights, such as the protected rights associated with reporting or filing a complaint of sexual harassment.

The Speak Out Act now provides additional protection relative to claims filed under federal, state, or tribal law on or after December 7, 2022.

Vast Majority of These Provisions Are Still Allowed

The Act doesn’t affect predispute nondisclosure and nondisparagement provisions as applied to any matters other than sexual assault and sexual harassment disputes.

For example, nothing in the Act prohibits an employer from protecting trade secrets and other confidential information against unauthorized access, use, and disclosure by employees, contractors, or others. Similarly, the Act doesn’t prevent parties from using such provisions in a settlement agreement relating to the resolution of a pending sexual harassment claim.

But what about this scenario? An employer suspects that an employee has been subjected to sexual harassment, but she has never disclosed this information to her employer. The employer offers her a separation agreement and general release as part of its conditional courtesy offer of post-employment separation pay. This will likely be an area of future litigation for fair employment agencies and courts to resolve.

Bottom Line

Employers have a duty to prevent unlawful discrimination, harassment, and retaliation in the workplace, to promptly investigate allegations of such matters when they arise, and to take appropriate action to address such matters.

An employer that fails in its duty to act can be exposed to significant liability and can’t rely on a predispute nondisclosure or nondisparagement provision to avoid its obligations. It’s unlikely that an employer would attempt to use a nondisclosure or nondisparagement provision in that manner, but just in case, the Speak Out Act protects against it.

By Troy Thompson. Mr. Thompson is a partner and Labor and Employment Practice Group Leader with Axley Brynelson, LLP, in Madison, Wisconsin. Troy’s practice focuses on helping his clients be successful in legal compliance, operational flexibility, leadership development, and risk avoidance and management matters.

[1/2023]

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