Shortly following the 5 year anniversary of #MeToo gaining significant national (and international) attention, on December 7, 2022, President Biden signed into law S.B. 4524, also known as the “Speak Out Act.” The Act seeks to ensure that “victims and survivors [of sexual assault and harassment] have the freedom to report and publicly disclose their abuse.” In proposing the bill, Congress specifically found that pre-dispute nondisclosure and non-disparagement clauses can perpetuate illegal conduct by silencing survivors and victims and shielding perpetrators. In order to arm individuals with the ability to “speak out”, the Act makes pre-dispute non-disclosure and non-disparagement clauses in disputes relating to claims of sexual assault or sexual harassment unenforceable. The Act applies to any claim that is filed under Federal, State, or Tribal law on or after December 7, 2022, the enactment of the Act.
The Act defines a non-disclosure clause as “a provision in a contract or agreement that requires the parties to the contract or agreement not to disclose or discuss conduct, the existence of a settlement involving conduct, or information covered by the terms and conditions of the contract or agreement.” The Act further defines a non-disparagement clause as a “provision in a contract or agreement that requires 1 or more parties to the contract or agreement not to make a negative statement about another party that relates to the contract, agreement, claim, or case.”
Notably, the Act does not prohibit employers from entering into nondisclosure and non-disparagement provisions with their employees; rather, the Act only prevents the enforcement of nondisclosure and non-disparagement provisions in connection with disputes relating to sexual harassment and sexual assault. Further, the Act only applies to nondisclosure and non-disparagement clauses signed before a dispute arises, meaning that it generally does not prohibit such provisions in settlement or severance agreements. The Act does not define the word “dispute.” The Act also does not prohibit employers and employees from protecting trade secrets or proprietary information (though neither of these terms are defined in the Act).
The Act specifically permits enforcement of state or local laws that are “at least as protective of the right of an individual to speak freely as provided by this Act.” Thus, while the Act may not prohibit nondisclosure and non-disparagement clauses in settlement or severance agreements, the Act does not prevent the application of more restrictive state or local laws. For example, other states, such as California’s Silenced No More Act, Illinois’ Workplace Transparency Act, and Section 5-336 of the New York General Obligations Law place limitations on the use of non-disclosure and non-disparagement provisions in settlement, severance, and/or separation agreements. Other states, such as Oregon, have similar laws going into effect in 2023. These laws would still apply to employers with employees in those states even though they are more restrictive than the Act.
The Act had broad bipartisan support, being passed by the Senate under unanimous consent, and by the House with 215 Democrat and 100 Republican supporters, including the major leadership of both parties. The Act was signed the same year as President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act on March 3, 2022, which, as described in Michael Best’s previous alert, amended the Federal Arbitration Act and curbs the use of pre-dispute arbitration agreements for sexual assault and sexual harassment claims.
We encourage you to reach out to one of the authors listed below or your Michael Best attorney with any questions or inquiries related to this recent update.