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Another New Federal Law Bans Non-Disclosure Clauses and Non-disparagement Clauses in Sexual Harassment Agreements prior to the Dispute

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Another new law, known as The Speak Out Now Act, was signed into law by President Biden on December 7, 2022.  It supplements a prior law known as the Ending of Forced Arbitration of Sexual Assault and Sexual Harassment Act, which prohibits mandatory arbitration for sexual harassment and sexual assault disputes, that President Biden signed earlier in 2022.  

The new act explicitly bans all non-disclosure clauses and non-disparagement clauses regarding a sexual assault or sexual harassment dispute that is "agreed to before the dispute arises. . . in which conduct is alleged to have violated Federal, Tribal, or State law."  The effect of the law is that as of December 7, 2022, all such clauses are unenforceable.  The prohibition applies to all agreements, regardless of when they were signed, as long as the sexual assault or sexual harassment dispute was brought on or after December 7, 2022.  

The statute does contain a provision indicating that nothing in it prohibits an employer and an employee from protecting trade secrets or proprietary information.  Further, it only applies to a sexual assault or a sexual harassment dispute.  Thus, the law does not apply to such non-disclosure clauses and non-disparagement clauses as part of a settlement agreement after a sexual harassment or sexual assault dispute arises.  This new law does not supersede more restrictive state laws, however.

This article is part of our February 2023 Newsletter.

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