The New Speak Out Act Voids Predispute Nondisclosure and Nondisparagement Provisions
On December 7, 2022, President Biden signed into law the Speak Out Act, which had previously passed the House of Representatives on a bipartisan vote of 315–109, and the Senate unanimously. The law purports to allow survivors of workplace sexual assault or harassment to speak out about their experiences, notwithstanding the existence of nondisclosure (“NDAs”) or nondisparagement provisions in predispute agreements between employers and their former, current, or prospective employees. Although the law responds to a prominent debate about the propriety of nondisclosure and nondisparagement provisions, the Speak Out Act’s limitation to predispute agreements means that it is unlikely to apply to many of the settlements reached between employees and their employers in sexual assault and harassment cases.
The Speak Out Act responds to a growing outcry spurred by the #MeToo movement over the prevalence of nondisclosure and nondisparagement contractual provisions. In high-profile cases involving serial abusers such as Harvey Weinstein and Bill O’Reilly, the public learned that survivors had signed strict confidentiality provisions that limited their ability to speak about their experiences. Gretchen Carlson, a former Fox News anchor who filed a sexual harassment lawsuit against former Fox News CEO Roger Ailes, signed a $20 million settlement that included a nondisclosure provision. Carlson has since been engaged in active efforts to ban these provisions.
The Speak Out Act expressly responds to the concerns about confidentiality provisions raised by the #MeToo movement and offers welcome progress. As the findings of the law report, “it is essential that victims and survivors have the freedom to report and publicly disclose their abuse.”
For background about these contractual provisions, nondisclosure and nondisparagement provisions may be classified into two groups: (1) predispute confidentiality provisions and (2) postdispute confidentiality provisions. Typically, a predispute confidentiality provision might be included in an employment agreement. Based on the data available, these confidentiality provisions in employment contracts appear to be widespread—according to one study, over one-third of the U.S. workforce is subject to NDAs in their employment contracts. These provisions are perhaps even more pervasive among high-income employees, as an empirical analysis in the Vanderbilt Law Review found that 87.1% of a sample of CEO contracts had NDAs. These provisions may subject employees to potential litigation and liability if they speak publicly about their employment experiences. And while these clauses cannot prohibit employees from engaging in some activity, such as filing charges with the Equal Employment Opportunity Commission (“EEOC”), these provisions may mislead employees about their rights by failing to note such exceptions. As a result, these provisions have the broad effect of chilling employee speech, even legally protected speech.
In contrast to a predispute provision, a postdispute confidentiality provision would typically be included in a settlement agreement or other contract reached after an employee brings allegations of sexual harassment or abuse. In many workplace sexual harassment and assault cases, employees who have sexual assault or harassment claims against employers settle those claims out of court through settlement agreements. Under these agreements, an employee may agree to general release provisions, which waive the employee’s legal claims against the employer, and an NDA in exchange for a mutual nondisparagement provision, monetary compensation, and other remedies.
Significantly, the Speak Out Act only applies to predispute confidentiality provisions. As the law states, “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.” (emphasis added). This provision means that the Speak Out Act would render unenforceable only the nondisclosure and nondisparagement clauses that existed before the sexual assault or harassment dispute arose. Thus, if an employee signed an agreement with confidentiality provisions after making sexual assault or harassment allegations, the Speak Out Act would not apply. The law also only applies after its enactment on December 7, 2022, and does not “prohibit an employer and an employee from protecting trade secrets or proprietary information.”
Although both predispute and postdispute confidentiality provisions have come under fire—Carlson and the advocacy organization Lift Our Voices have stated that they want to ban postdispute confidentiality provisions as well—the Speak Out Act’s ban on predispute confidentiality provisions is a more limited step that provides clear benefits to all workers.
Banning predispute provisions is an important victory for workers. In exchange for signing an employment contract with these confidentiality provisions, workers often get little in return—frequently, employment contracts are not subject to negotiation. As the Speak Out Act recognizes, there is little good reason for an employer to muzzle a worker in advance of sexual harassment or abuse. Moreover, without NDAs or nondisparagement clauses hanging over their heads, workers may freely choose to speak out about their workplace experiences if they feel that publicly discussing these issues is the best option for them. Prohibiting these clauses may enhance the bargaining power of workers subjected to sexual harassment or assault in the workplace; if workers can credibly threaten to go public with their experiences, employers will have to take their concerns more seriously. The Speak Out Act is an important first step in this space, and legislators at all levels should continue to work so that similar laws cover confidentiality provisions relating to all employment and labor law violations, not just sexual harassment and assault, as well as address retaliation, and even provide private rights of action, as the National Women’s Law Center recommends.
By contrast, the effects of banning postdispute provisions could be more ambiguous and less clearly beneficial to workers. Proponents of such bans argue that they are necessary to allow victims to speak about their experiences. However, as Katz Banks Kumin founders Debra S. Katz and Lisa J. Banks have argued, banning these provisions would likely force some harassment and assault victims to either litigate their claims or stay silent. Because of the cost, time, and publicity involved in litigation, many workers prefer to settle their sexual harassment or assault claims out of court. But without the critical bargaining chip of confidentiality provisions, many workers would be hard-pressed to get their employer to come to the negotiating table in the first place, let alone reach a settlement. Such a prohibition on confidentiality provisions could thus leave more workers without compensation for the misconduct they suffered. The National Women’s Law Center has encouraged states “to leave workers the option to request nondisclosure language in settlement agreements.”
Indeed, as the debate about the desirability of these provisions continues, states have acted to curb the use of nondisclosure and nondisparagement clauses. In fact, in a three-year period before the federal Speak Out Act became law, between 2017 and 2020, around a dozen states had banned predispute provisions that prevented workers from disclosing sexual harassment or assault. States have also tried to limit, but not ban, the use of postdispute confidentiality provisions. For instance, New York State legal reforms enacted in 2018 and 2019 prohibit confidentiality provisions in employment discrimination agreements unless those provisions are the alleged victim’s preference. The New York law also now provides employees with a twenty-one-day period to consider the provisions and a seven-day period to revoke the agreement.
The Speak Out Act comes on the heels of the enactment of an important federal law, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, that addresses another issue highlighted by the #MeToo movement, the use of forced arbitration to keep sexual harassment and assault claims out of court and the public eye. That bill, which President Biden signed into law in March 2022, has a similar structure to the Speak Out Act and applies to the enforcement of predispute arbitration agreements or joint-action waivers, which are often found in employment contracts. In fact, the Economic Policy Institute has estimated that more than half, 56.2%, of nonunion private-sector employees are subject to mandatory arbitration through their employment contracts. This law applies to any dispute or claim that arises or accrues on or after March 3, 2022, and provides that courts, rather than arbitrators, have the power to determine whether the Act applies. Many commentators have rightly celebrated the law as a victory for workers, as it allows survivors of sexual harassment and assault to have their day in court if they so desire it.
Notably, the Ending Forced Arbitration Act applies only where the Federal Arbitration Act (FAA) applies—if the FAA does not apply, the Act then does not apply, and whether arbitration is required depends on state law. Some scholars have criticized the lack of comprehensive exemption from arbitration as limiting Congress’s goal of improving access to justice for survivors of sexual assault and harassment. In response to #MeToo, some companies such as Google, Meta, Airbnb, and eBay voluntarily ended their forced arbitration policies.
Together, these two laws have chipped away at forced arbitration and predispute confidentiality provisions, which have limited workers’ options in seeking redress for workplace sexual harassment or assault. Now, notwithstanding any language in their employment contracts, workers can access the courts to pursue, and speak publicly about, claims of sexual harassment and assault. While the public debate continues about postdispute confidentiality provisions as they relate to sexual harassment and assault, the Speak Out Act has taken an important first step in curtailing predispute confidentiality provisions, an achievement that legislators should continue to build on.