President Biden is expected to enact the Speak Out Act in the near future, which was passed by Congress on November 16, 2022, to combat sexual assault and harassment in the workplace. The act will apply to sexual assault or harassment claims brought by an employee under state, federal, or tribal law on and after its effective date. Under the act, an employer will be prohibited from enforcing a nondisclosure or nondisparagement provision contained in an employment agreement, nondisclosure agreement, or other agreement previously signed by an employee to silence that employee’s sexual assault or harassment allegations, in or outside of court. Thus, past, present, and future nondisclosure agreements requiring an employee to keep details of future sexual assault or harassment disputes confidential, will be unenforceable as to claims arising after the effective date. Similarly, past, present, and future nondisparagement provisions which limit an employee’s ability to speak against the employer concerning future sexual assault or harassment disputes will be unenforceable after the enactment date. However, the Act does not affect post-dispute agreements such as settlement agreements signed after a sexual harassment or sexual assault dispute arises – these can continue to include nondisclosure provisions under Federal law. But, states may continue to enforce their laws that provide an employee equal or more protection with respect to speaking out about alleged sexual assault or harassment in the workplace after the Federal law is passed.
Nevertheless, a nondisclosure and non-disparagement agreement concerning the settlement of a sexual assault or harassment dispute entered into between an employee and employer will remain enforceable, as permitted by state law. As will such agreements entered into at the outset of employment that do not include sexual assault or harassment, as permitted by state law. However, California has already passed its own broader Silenced No More Act limiting nondisclosure and nondisparagement agreements related to all FEHA claims, not just sexual harassment. For example, under Code of Civil Procedure section 1001, settlement of any discrimination or harassment lawsuit or administrative agency action (not just one for sexual harassment) may not prohibit disclosure of factual information related to such FEHA claim. The settlement for a FEHA lawsuit or agency claim can agree only to limit disclosure of the settlement amount and/or the claimant’s identity, not the underlying facts supporting the claim. In fact, California law goes so far as to mandate that any nondisparagement provision in a severance or settlement agreement that releases a FEHA claim or right must notify the employee that the agreement does not prohibit the employee from discussing or disclosing unlawful acts in the workplace.
Thankfully, the Speak Out Act explicitly allows employers to protect proprietary information and trade secrets via nondisclosure agreements entered into with their employees. Considering that this Act will likely be enacted soon, employers should review the wording of their nondisclosure and nondisparagement agreements entered into with their employees as a condition of employment to ensure the agreements comply with the act and applicable state law. Once enacted, employers should redraft those provisions to ensure they do not explicitly prohibit employees from discussing alleged sexual assault and harassment at the workplace (as well as disclosing other unlawful workplace acts, as required), or risk those provisions being held unenforceable.