On December 7, 2022, President Biden signed the "Speak Out Act" which became effective that day. The Act prohibits the enforcement of blanket non-disclosure and non-disparagement clauses that are entered into before any allegation of sexual assault or sexual harassment. If such a provision is agreed to before a dispute arises it will be judicially unenforceable. Congress found that such provisions "can perpetuate illegal conduct by silencing those who are survivors of illegal sexual harassment and assault or illegal retaliation" and that they protect perpetrators, "enabling them to continue their abuse." The Act is in line with the new law signed in March to prevent the forced arbitration of sexual harassment and sexual assault claims.

A non-disclosure clause is defined in the Act 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." A non-disparagement clause is defined as 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."

Because the Act applies to pre-dispute clauses, employers remain able to include non-disclosure and non-disparagement clauses in settlement agreements and separation agreements that resolve sexual harassment or sexual assault claims. The Act does not limit employers seeking to protect trade secrets or other proprietary information.

The federal law does not prevent states from enacting more restrictive laws. Employers should be mindful of what state and local laws require.

We recommend employers review their employment agreements and policies to ensure compliance with this Act.