The Speak Out Act – New Law Implements Limits on Confidentiality and Nondisparagement Provisions

On Nov. 16, 2022, the House passed the “Speak Out Act,” which President Biden is expected to sign into law. The Act limits the enforceability of pre-dispute nondisclosure and nondisparagement provisions relating to disputes involving sexual assault and sexual harassment. In other words, agreements in which employees agree to keep confidential any future sexual assault or harassment claims are unenforceable under the Act, as are general nondisparagement covenants to the extent they would limit an employee’s ability to comment on a sexual harassment dispute or a sexual assault dispute.

In practice, the Act may have limited impact. Most confidentiality agreements are focused on the employer’s proprietary information and trade secrets and thus would not reach information concerning allegations of sexual harassment or sexual assault. While broad nondisparagement covenants clearly would be limited under the Act, many employers do not use such clauses in the ordinary course, and such covenants may be subject to challenge under other laws. Finally, the law only applies to pre-dispute agreements and thus does not impact confidentiality and nondisparagement agreements entered into after a dispute arises, such as in a separation or settlement agreement.

Employers should keep in mind, however, that in many jurisdictions there are other limits to nondisclosure provisions relating to claims of sexual harassment. As we have previously reported, Section 5-336 of the New York General Obligations Law prohibits employers from requiring a nondisclosure provision in any settlement agreement resolving claims of discrimination unless the condition of confidentiality is the complainant’s preference. Similarly, under the Illinois Workplace Transparency Act, an employer may not unilaterally include a nondisclosure provision in a settlement agreement that prohibits an employee from disclosing unlawful employment practices unless confidentiality is the documented preference of the employee.

In light of the passage of the Speak Out Act, employers should consider whether to modify agreements entered into as a condition of employment that include nondisclosure or nondisparagement provisions.

Please contact a member of Kramer Levin’s Employment Law department with any questions or concerns about the topics raised in this alert.