U.S. Congress Passes Law That Will Void Non-Disclosure Agreements Related to Sex Harassment Claims
On November 16, Congress passed the Speak Out Act on a bi-partisan vote of 315-109. We can expect President Biden to quickly sign the Bill into law, which will take immediate effect.
The new law will prevent courts from enforcing Non-Disclosure Agreements (NDAs) in “disputes” where a party has alleged sexual assault or sexual harassment. (Note that the bill refers to “disputes” but does not define them, so it is unclear whether it will be limited to formal litigation or something as simple as an informal internal complaint.) The bill defines NDAs broadly – any contractual provision that requires a party to not 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 Act will also render void “non-disparagement clauses” in sexual assault or harassment disputes – any contractual provision that requires any party not to make a negative statement about another party that relates to the contract, agreement, claim, or case.
Significantly, the Act will only void NDA and Non-Disparagement provisions entered into before a dispute arises. Such agreements entered into as part of a settlement agreement should not be prohibited by the Act. This Act can be seen as a “sister bill” to the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act” passed by Congress earlier this year. You may recall that this bill prevents employers from enforcing pre-dispute arbitration agreements without the employee’s consent in cases involving sexual harassment and sexual assault.
Action Items: In anticipation of this new law, employers should:
- Evaluate employer and independent contractor agreements to see if they contain prohibited NDA, Non-Disparagement, or arbitration provisions.
- Review your standard settlement documents to make sure that you properly address NDA and Non-Disparagement language.
- TRAIN your supervisors and line-level employees regarding sexual harassment.
These cases as becoming more common and, at the same time, more expensive and difficult to resolve. You have heard the old saying many times: “The best defense is a good offense.” This especially holds true when dealing with sexual harassment. Prepare, anticipate and TRAIN.