The Speak Out Act: Key Points You Need to Know
With 2023 underway, employers should be mindful of new federal legislation affecting key provisions in their employment agreements. On December 7, 2022, President Biden signed into law the “Speak Out Act,” which prohibits enforcement of a pre-dispute nondisclosure clause or non-disparagement clause regarding claims of sexual assault or sexual harassment. The Act was effective immediately, applying to all agreements entered into after December 7, 2022. Agreements entered into prior to that date are unaffected.
For purposes of the Act, a nondisclosure clause is any provision that requires parties “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 any provision that requires one or more parties “not to make a negative statement about another party that relates to the contract, agreement, claim, or case.”
Importantly, the Speak Out Act only applies to agreements entered into “before the dispute arises.” This means that an agreement entered into after a dispute arises—including a settlement or separation agreement—are not affected by the Act (but may nonetheless be restricted by an applicable state law). In addition, the Act does not restrict the use of non-disparagement or nondisclosure clauses for other purposes, including to protect an employer’s trade secrets or proprietary information.
What Next?
Employers should review their employment agreements to make sure they are in compliance with the Speak Out Act. In addition, employers should note that the Speak Out Act is one of several laws passed in recent years to limit restrictions on disclosure of sexual harassment claims. For example, Maine’s recent LD 965, codified at 26 M.R.S. § 599-C, contains several restrictions affecting Maine employment, separation, and settlement agreements. (Read more about Maine’s non-disclosure agreement law here). Employers should be mindful of what state laws apply to their agreements and modify nondisclosure and non-disparagement clauses accordingly.
If you have any questions regarding the Speak Out Act or nondisclosure or non-disparagement provisions, contact Liz Johnston or another member of Verrill’s Employment & Labor Group.
