The law is not clear, so a risk-benefit analysis needs to be conducted to determine if a carveout should be included.

The Speak Up Act was signed into law December 7, 2022, by President Joe Biden. Notwithstanding our highly partisan times, the bill was passed by the Senate by unanimous consent and by the House by a strongly bipartisan vote of 315 to 109.

The new law states:

With respect to a sexual assault dispute or sexual harassment dispute, no nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated Federal, Tribal, or State law.

The law is pretty straightforward―except that it is not.

Let’s assume an employer has employment agreements or a code of conduct that generally prohibits disparagement. Does the employer need a carveout for claims of sexual assault or sexual harassment in order to avoid violating the new law? The law is not clear, so a risk-benefit analysis needs to be conducted to determine if a carveout should be included.

Let’s now assume an employer includes a carveout for sexual assault or harassment. Is there a negative implication that an employer cannot raise concerns about racial and other forms of harassment? Again, the law is not clear. And again, a risk-benefit analysis needs to be conducted to determine whether to include a carveout broader than the scope of the Speak Up Act.

But, we are not done yet. It’s not only EEO laws that employers need to consider. A general nondisparagement clause may violate SEC and other regulatory guidance. In the risk-benefit analysis, we need to consider statutes other than the EEO laws

Of course, we are dealing only with preemptive prohibitions under the Speak Up Act. But the law also makes clear that state and local laws may be more restrictive―and many are. A growing number of states limit the restrictions an employer can impose relative to confidentiality and nondisparagement when resolving a claim of sexual assault or sexual harassment. Or they impose requirements for when and how such restrictions may be imposed.

Further, some states go beyond sexual assault and sexual harassment in terms of restrictions or requirements relative to confidentiality or nondisparagement. Among the states that include statutory restrictions, requirements and prohibitions are California, Illinois, Oregon, New Jersey, New York, Virginia and Washington. These and other laws differ, so developing template documents, including severance agreements, requires some creativity for multistate employers.

A Fresh Look at Policies, Agreements and Complaint Procedures

Let’s put aside the law altogether. What’s the cultural message of trying to gag employees when it comes to actual or perceived legal wrongs? As we approach 2023, now is a good time to review your company’s code of conduct, employment agreements, confidentiality agreements, business protection agreements, severance agreements and other policies to determine how to balance competing interests.

On the issue of speaking up, while employees have a right to do so, better outcomes are possible if an employee feels comfortable raising concerns internally. That will occur only if the employee has viable points of contact with which to raise concerns and there is a strong policy against retaliation that is reflected in the cultural reality.

So please add to your 2023 to-do list of important issues a revisiting of the viability of your complaint procedures and the strength of your culture when it comes to brooking no retaliatory conduct.

For More Information

If you have any questions about this Alert, please contact Jonathan A. Segal, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.