In a rare show of bipartisan cooperation, the Speak Out Act (SOA) was approved by the House of Representatives November 16, 2022 and signed into law by President Biden on December 7, 2022.
The SOA limits the enforceability of non-disclosure and non-disparagement clauses in settlement agreements entered into before an allegation related to sexual assault or sexual harassment has been made or before a claim has been filed by an employee (or an independent contractor). Note that the SOA applies only to pre-dispute agreements.
After a dispute has arisen, i.e., after an employee has alleged sexual harassment or sexual assault in a charge of discrimination or a lawsuit, employers can still include enforceable non-disclosure and non-disparagement clauses in settlement agreements. Note that the SOA does not define “dispute,” so whether an employee’s making a complaint to a supervisor or human resources without a formal filing is sufficient to create a dispute is unclear. I would argue that an internal complaint that puts the employer on notice of a dispute is sufficient.
Accordingly, if an employee signs a non-disclosure or non-disparagement agreement before an allegation for sexual harassment has been made, the employer may not be able to enforce those terms against the employee. Conversely, after the employee complains of harassment and the employer offers to settle the matter and requires the employee to sign a non-disclosure or non-disparagement agreement as part of the settlement, then such terms in the settlement agreement are enforceable.
Important to note is that the SOA was enacted to prevent situations where alleged victims of sexual harassment or assault cannot, due to having previously signed a non-disclosure and non-disparagement agreement, speak publicly about what occurred. Based on the recent enactment of the SOA, employers should now review (or have legal counsel review) employment agreements, separation agreements, confidentiality agreements, arbitration agreements, and employment policies to ensure that any non-disclosure and non-disparagement clauses therein exclude unknown disputes arising from sexual assault and sexual harassment allegations and that such documents are otherwise compliant with the SOA.
The SOA follows the enactment of the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act,” another federal law that prohibits employers from requiring arbitration of sexual harassment or sexual assault claims and even after an employee has signed an agreement requiring arbitration of these matters.
The SOA does not apply retroactively to agreements made before December 7, 2022 and does not bar non-disclosure and non-disparagement agreements entered into in settlement of other employment-related disputes.
For any inquiries regarding the SOA or any other employment-related matter, please feel free to contact Ellen.
Ellen M. Leibovitch
Board Certified Labor & Employment Lawyer
ASSOULINE & BERLOWE, P.A.
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Boca Raton, FL 33431
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