Speak Out Act – New Federal Law Limits Employers’ Enforcement Of Certain Contract Provisions

The U.S. Congress recently passed a new law effecting employers. The “Speak Out Act” seeks to restrict the use of confidentiality and nondisparagement contract provisions in disputes involving sexual assault and sexual harassment. Specifically, if a dispute involves sexual assault or sexual harassment, the new law prohibits an employer from seeking to enforce a confidentiality and/or nondisparagement provision that was present in the employee’s or former employee’s contract.

The purpose of the law is to ensure that survivors of sexual assault and sexual harassment can go public with their allegations, “hold perpetrators accountable for abuse, improve transparency around illegal conduct, enable the pursuit of justice, and make workplaces safer and more productive for everyone.”

Unlike the arbitration law passed earlier this year, the Speak Out Act does not prohibit an employer from using confidentiality and nondisparagement provisions in employment contracts – it simply restricts the judicial enforcement of those provisions if a dispute later arises that involves sexual assault or sexual harassment.

Additionally, the Speak Out Act does not prohibit an employer and an employee from agreeing to settle a sexual assault or sexual harassment dispute and including a confidentiality or nondisparagement clause in the settlement agreement. However, Nevada law prohibits the parties to a contract or settlement agreement from restricting a party’s ability to testify about the other’s criminal offense, sexual harassment, or an employer’s act of discrimination or retaliation.

The Speak Out Act does not require any direct and immediate action by employers unless you are currently involved in a dispute concerning sexual assault or sexual harassment and want to enforce a confidentiality or nondisparagement provision. In crafting employment agreements in the future, however, employers should consider whether they want to use confidentiality and nondisparagement provisions and how those provisions should be drafted to comply with both federal and state law.

As always, KZA attorneys can help you draft or revise employment agreements and analyze any pending claims or disputes you are facing. 

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.