On November 16, 2022, the House of Representatives passed a bill that will nullify some nondisclosure agreements (NDAs) signed by employees who assert claims of sexual harassment or assault. The bill, known as The Speak Out Act (S. 4524), passed the Senate unanimously in September. It will now head to President Biden for his signature.
In the findings prefacing the bill, Congress wrote, “[n]ondisclosure 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 and assault or illegal retaliation, or have knowledge of such conduct, while shielding perpetrators and enabling them to continue their abuse.” Therefore, Congress found, “[p]rohibiting 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.”
A “nondisclosure clause” is defined “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 term “nondisparagement clause” means 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.”
Not all NDAs, including some related to sexual harassment or assault litigation, will be invalid. The text of the bill reads, “With respect to a sexual assault dispute or sexual harassment dispute, no nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated Federal, Tribal, or State law.” The focus of the bill is on the enforceability of agreements signed before a dispute or misconduct even arises, such as agreements signed before or upon the commencement of employment. The rationale is that these pre-misconduct agreements may silence victims who would otherwise speak out except for a fear of breaking the agreement.
Nothing in the bill will invalidate NDAs or confidentiality agreements signed in connection with the settlement of a sexual harassment or assault claim. Likewise, nothing in the bill will prevent the use of NDAs to protect trade secrets or similar confidential or proprietary information.
This is second recent piece of Federal legislation aimed at securing rights for the victims of sexual assault and harassment. In March 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. This law invalidates arbitration agreements that preclude a party from filing a lawsuit in court involving sexual assault or sexual harassment, at the election of the party alleging such conduct.