Speak Out Act Set to Prohibit Employment Nondisclosure and Non-Disparagement Agreements
By: Jacqueline C. Gerrald, Partner, McLaughlin & Stern, LLP
On December 7, 2022, President Biden signed into law the “Speak Out Act”, which prohibits the judicial enforceability of pre-dispute non-disclosure and non-disparagement clauses between employers and employees and independent contractors (as well as between providers of goods and services and consumers), regarding claims of sexual harassment and assault. Noticeably, the Act does not ban the use of such agreements after a claim has been made but, instead, provides that a nondisclosure clause or non-disparagement clause that a party agrees to before the dispute arises shall not be judicially enforceable.
The purpose of the Act is to prevent perpetrators of illegal sexual harassment and assault from silencing victims and survivors of such conduct or those with knowledge of such conduct. With the passage of the Speak Out Act, it will be substantially easier for claimants to seek legal action without the concern of violating their employment or separation agreements containing such clauses. This will not only make it easier to get compensation for the harm they suffered but help to limit future abuse.
The Act provides that it shall not prohibit a state or locality from enforcing its law regarding nondisclosure or non-disparagement clauses provided that such law is at least as protective as the Act. Also, the Act does not bar an employer or employee from protecting trade secrets or proprietary information.
The Act provides that it applies to claims filed “under Federal, State, or Tribal law on or after the date of enactment,” i.e., December 7, 2022.
A Comparison to State Law
It should be noted that many states already have restrictions on nondisclosure agreements. For example, New York’s General Obligations Law, § 5-336 prohibits employers from including a nondisclosure clause in any settlement agreement which involves claims of discrimination unless the complainant states in writing, after having 21 days to consider such a clause, that it is his or her preference to have the condition of confidentiality.
If you have any questions regarding the recent legislation or other matters involving Employment Law, please contact the Chairs of the McLaughlin & Stern, Employment Law Group, Steven J. Hyman (https://www.mclaughlinstern.com/attorneys/steven-j-hyman/) and/or Jacqueline C. Gerrald (https://www.mclaughlinstern.com/attorneys/jacqueline-c-gerrald/).