Earlier this year, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. The law allows victims of sexual assault or sexual harassment to litigate their claims in court even if they signed an arbitration agreement.
At the end of last month, a bipartisan group of representatives in the House introduced legislation to limit the use of nondisclosure and nondisparagement agreements involving claims of sexual assault and sexual harassment.
It’s called the Speak Out Act.
Now, if you read the first 90% of this press release from one of the bill sponsors, you’ll read about how the Speak Out Act will “prohibit NDAs in cases of sexual harassment and assault” and “eradicate nondisclosure agreements.”
That’s not exactly what’s going on here.
Specifically, the Speak Out Act will void any nondisclosure and nondisparagement clauses found in pre-lawsuit agreements concerning conduct alleged to constitute sexual harassment or sexual assault. If this sounds complicated, I’ll explain how it works with a few examples.
- An employer has a reduction in force and offers a severance package to departing employees. The severance agreements contain nondisclosure and nondisparagement clauses. Any employee who signs the agreement is free to discuss any allegations of sexual harassment with others. S/he could even file a Charge of Discrimination with the U.S. Equal Employment Opportunity Commission alleging sexual harassment. (An employee could still do that even without the Speak Out Act). However, since the agreement will presumably include a general release, the employee won’t be able to recover any money.
- One of the employees in the first example does not sign the severance agreement. Instead, s/he files an EEOC Charge alleging sexual harassment. If the employer and employee subsequently settle the Charge before the employee files a lawsuit in court, the Speak Out Act would allow the employee to discuss their claims with others. However, the employee can’t recover any more money.
- What if the employee who doesn’t sign a severance agreement sues the employer in court for sexual harassment? Suppose the parties eventually settle. Any nondisclosure and nondisparagement clauses in the settlement agreement would be 100% enforceable because it’s no longer a pre-lawsuit agreement.
The Speak Out Act isn’t much of a game-changer. However, it does allow victims of sexual harassment and sexual assault to speak out if they so choose.