Federal Prohibition of NDAs in Sexual Assault and Harassment Cases Becomes Law

By Christopher T. Vrountas, Esquire and Allison C. Ayer, Esquire, Vrountas, Ayer & Chandler, P.C.

OnDecember9,2022,PresidentBidensignedintolawtheSpeakOutAct.Briefly, this law makes unenforceable any non-disclosure and/or non-disparagement clauses parties might agree to before a dispute for sexual assault or sexual harassmentarises.

Explaining the need for the law, the Act notes that 81% of women, and 43% of men have been subject to sexual harassment or assault; 1 in 3 women are sexually harassed at work; and 87% to 94% of those who experience sexual harassment never file a formal complaint. Concluding that non-disclosure and non-disparagement clauses only exacerbate these trends, Congress passed the Speak Out Act in order to limit people from making these types of agreementsbeforeasexualharassmentorassaultdisputeactuallyoccurs.

The relevant terms are defined quite broadly. A sexual harassment dispute is a dispute relating to conduct alleged to violate federal, state or Tribal law. A sexual assault dispute involves a dispute regarding nonconsensual sexual act or contact, including incidents when the victim lacks the capacity to consent, for example as a result of intoxication, disability or otherwise. A non-disclosure clause is defined as “ a provision in a contract or agreement that requires the parties…not to disclose or discuss conduct, the existence of a settlement involving[the]conduct,orinformationcoveredbythetermsoftheagreement.”

Anon-disparagementclausemeans“aprovisioninanagreementthatrequires 1 or more parties not to make a negative statement about another party that relatestothe…agreement…orcase.”

Thebroadlanguageinthelawmakesclearthataformalcomplaintorthefiling of a sexual harassment lawsuit is not needed for a dispute to arise. At the momentevenaninformaldisputearisesconcerningworkplaceconductthatan employee claims to have constituted sexually harassment or workplace conduct that an employee claims constituted unwanted and not consented to contact of a sexual nature, then there exists a “dispute” under the new law. Before this moment, employers cannot make an agreement requiring employees not to talk about sexual harassment or assault at work. But, after such a dispute arises, these agreements can still be made and can still be enforced.

Practically, this means that going forward an employer cannot anticipate sexual harassment/assault accusations and require any current or prospective employee or independent contractor to promise that they will refrain from talking about these incidents in advance. To put it plainly, employers cannot mitigate the risk of sexual harassment or assault claims by trying to shut people up in advance of an accusation, but they will be able to enforce nondisclosureagreementsinpost-suitsettlementagreements.

Importantly, the Speak Out Act does NOT stop employers from making an agreement to refrain from discussing an alleged sexual harassment or assault after a dispute arises. That means non- disparagement and non-disclosures clauses may still be included in agreements to settle lawsuits or administrative charges of discrimination with claims of sexual assault or harassment, so long as those agreements are entered into after the accusation is made or the lawsuitisfiled.

In this way, the law seeks to strike a balance. It removes one barrier to victims from being able to come forward publicly about sexually inappropriate behaviortheywereexperienceatwork.Butitalsorecognizesthatbeingallowed tofairlynegotiateconfidentialityiscriticaltoincentivizesettlementagreements of sexual harassment claims after a lawsuit is filed. Given the new law, employers should consult with counsel and review their employment and independent contractor agreements, handbooks and other personnel policies, as well as severance agreements, to make sure that they do not include nondisclosureornon-disparagementclausesthatwouldviolatetheAct.