On December 7, 2022, President Biden signed into law the Speak Out Act, which limits the enforceability of non-disclosure and non-disparagement clauses related to allegations of sexual assault and sexual harassment.
Under the Act, a non-disclosure clause is 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 “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.”
The new law renders unenforceable such clauses related to allegations or sexual assault/sexual harassment and that are entered into “before the dispute arises.” In other words, non-disclosure and non-disparagement clauses are unenforceable in contracts entered into after the dispute has arisen. As such, the Act does not apply to agreements resolving claims already made.
The Act also covers agreements signed before December 7, 2022 but only applies to disputes that have arisen after December 7, 2022.
The Act also specifically states that the Act does not prevent the application of more restrictive state or local laws.
Note:
The Speak Out Act follows federal legislation that prohibits mandatory pre-dispute arbitration agreements for claims of sexual harassment and sexual assault, which LCW reported in the February/March Private Education Matters. Private K-12 schools, colleges, and universities should consult with an LCW attorney about the impact of this new law on existing agreements and how to proceed with agreements moving forward.