The Speak Out Act’s Impact on Policies and Procedures in 2023
January 19, 2023 – Monthly Minute Memo – No. 2023-1
Early last year, on March 3, 2022, President Biden signed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021”. This Act, which amended the Federal Arbitration Act (FAA), placed a limit on pre-dispute agreements by prohibiting mandatory arbitration clauses to the extent they force arbitration of sexual harassment and/or sexual assault claims (unless the individual voluntarily enters into arbitration and/or voluntarily agrees post-dispute). Now, as we enter 2023, it is important to be aware of additional limitations imposed by the Speak Out Act regarding claims of sexual harassment and/or sexual assault.
I. Introduction to the Speak Out Act.
In addition to the prior amendment, the Speak Out Act further limits actions addressing the handling of sexual assault and sexual harassment claims pre-dispute. Specifically, as of its effective date, December 7, 2022, the Speak Out Act prohibits pre-dispute nondisclosure and non-disparagement clauses relating to sexual assault and sexual harassment claims.
In other words, the Speak Out Act provides that nondisclosure and non-disparagement provisions agreed to preceding the sexual assault or harassment dispute will not be enforceable. S.B. 4524 §4(a). Under the Act, a sexual harassment or assault dispute includes “a nonconsensual act or sexual contact” and “a dispute relating to conduct that is alleged to constitute sexual harassment.” S.B. 4524 §3(3-4).
As defined by the Act, a nondisclosure clause “means 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.” S.B. 4524 §3(1). A non-disparagement clause “means 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.” S.B. 4524 §3(2).
II. Implications and Best Practices for Employers.
The Act covers agreements containing non-disparagement and nondisclosure provisions entered into prior to a sexual assault or sexual harassment dispute and applies to any claims filed after December 7, 2022. As such, the Act does not impact agreements entered into after the dispute takes place, so long as it limits the nondisclosure and non-disparagement to the dispute in question, not future sexual assault and harassment disputes. General nondisclosure and non-disparagement provisions contained in settlement and separation agreements may be unenforceable if it contains language limiting the disclosure or discussion of future sexual assault and harassment.
It appears at this time that the penalty for a violation of the Speak Out Act is that the nondisclosure and/or non-disparagement provisions may not be enforceable if a dispute arises.
Thus, it is important that employers review all existing employment agreements with nondisclosure and non-disparagement language to ensure compliance with the Speak Out Act.
Additionally, the Speak Out Act does not change state or local laws that may further or otherwise restrict or limit nondisclosure and non-disparagement agreements. Employers should check their state and local laws for additional restrictions or limitations.