Biden signs Speak Out Act: What it means for employers

UPDATE: As expected, President Biden has signed the Speak Out Act into law, ushering in a new era of protection for victims of sexual misconduct who are subject to nondisclosure and/or non-disparagement agreements in connection with their employment.

The new law, which is effective as of the December 7 signing date, renders judicially unenforceable all pre-existing nondisclosure and non-disparagement clauses in cases involving alleged sexual assault or sexual harassment. In other words, it prevents employers from using nondisclosure or non-disparagement provisions to squelch victims of sexual misconduct from speaking out about their experiences.

The law took a swift path to enactment. First introduced in July by Senators Kirsten Gillibrand (D-NY), Marsha Blackburn (R-TN), Mazie Hirono (D-HI), and Lindsey Graham (R-SC), it was passed unanimously by the Senate in late September and by a 315-109 House vote near the middle of November.

Although the law has its limitations (as described below), it nonetheless represents a significant step forward for the class of sexual misconduct victims who are subject to such provisions.

“I just signed the Speak Out Act, a bill that’ll enable survivors to speak out about workplace sexual assault and harassment and increase access to justice,” Biden said on Twitter.

The law does not prevent parties from entering into nondisclosure or non-disparagement agreements in connection with the settlement of a claim or dispute relating to alleged sexual misconduct. Nor does it stop employers from using nondisclosure agreements to protect trade secrets or proprietary information.

Employers who wish to subject employees to broad nondisclosure/non-disparagement provisions must understand that those provisions cannot prevent employees from speaking out about sexual misconduct. In addition, any existing provision that specifically purports to prevent nondisclosure or non-disparagement in the context of sexual misconduct is now null and void and should be removed.

Best practice: Specifically limit the reach of nondisclosure provisions to trade secrets and proprietary information, and do not specifically include sexual misconduct in non-disparagement provisions.

It is also important to remember that many state laws similarly regulate nondisclosure and non-disparagement provisions, sometimes providing a greater level of protection to employees than the new federal legislation.

The original story follows below.

Ushered in with considerable fanfare, the Speak Out Act is widely being hailed as landmark federal legislation. But what does it really say – and do?

The new legislative measure – which is sure to be signed into law by President Biden – bans the judicial enforcement of pre-existing nondisclosure or non-disparagement clauses in cases involving sexual assault or sexual harassment.

It’s a significant statute with a laudable goal: to ban employers from muzzling employees who wish to speak out about sexual misconduct at work.

It is also indicative of a trend toward more broadly protecting employee rights in this area, as it comes on the heels of federal legislation barring mandatory arbitration of claims involving sexual assault and sexual harassment.

But a closer look raises a question: Does the new law’s substance justify the hype surrounding it?

Read on — and decide for yourself.

Speak Out Act: A positive step

Let’s make one thing clear: The passage of this legislation is undoubtedly a positive development, and here’s why. It establishes beyond a doubt that these agreements are unenforceable (as they should be), and it calls attention to that fact. Encouraging victims of a sexually hostile work environment to speak out freely is a good thing, as is clarifying via federal codification that purported agreements to block such speech beforehand are not enforceable. But it is also apparent that the reach of the new law is limited, and that it has its shortcomings.

First, the Speak Out Act is narrow in scope. Specifically, it applies only to pre-dispute agreements. That means it does nothing to stop the kind of hush money arrangements reportedly entered into after the fact by people like Harvey Weinstein – who has been portrayed as a catalyst for the legislation. The law does not block parties from entering into nondisclosure agreements after sexual misconduct takes place.

To be clear, Weinstein also reportedly subjected employees to nondisclosure requirements at the onset of employment. But insofar as those provisions could be construed to have banned the reporting of criminal activity, including criminal activity related to sexual misconduct, the argument is strong that they were already null and void.

And that is the second limitation of the new law: The class of nondisclosure agreement provisions that it bans were likely already illegal as against public policy. As such, there is a strong argument that the law merely codifies a legal truism that previously existed.

Elevated treatment

Third, the statute essentially elevates sexual harassment over other forms of mistreatment at work. It portrays a value judgment that victims of sexual mistreatment are entitled to a greater level of protection in regard to nondisclosure requirements than victims of other forms of workplace mistreatment. But should federal statutory law provide a greater level of protection in this regard for sexual mistreatment cases than it does for cases involving other kinds of mistreatment? It is reasonable to suggest that people in other traditionally oppressed groups, such as racial minorities, may be asking, “What about us?”

Fourth, a number of state laws already provide these broader protections. In Maine, for example, employers cannot use nondisclosure agreements to block employees from talking about workplace discrimination and harassment. And in California, employers cannot use nondisclosure agreements in connection with settlement agreements that involve sexual assault or sexual harassment. These laws place a glaring spotlight on the absence of a broader measure of protection in the Speak Out Act.

Renewing the focus

While significantly limited, the Speak Out Act is a positive development that may encourage more employees to report sexual misconduct at work. And in light of the problem it seeks to remedy, it also highlights the need for employers to place a renewed focus on fostering a culture that has zero tolerance for sexual harassment and related misconduct.