Congress Limits NDAs for Sexual Harassment Claims

The Speak Out Act – which covers employees and independent contractors – makes pre-dispute nondisclosure and non-disparagement agreements unenforceable in cases involving sexual assault or sexual harassment. 

A study conducted in 2021 found that more than half of workers in surveyed firms were covered by an NDA.

Notably, the bill only applies to pre-dispute agreements, and only in sexual harassment and sexual assault contexts. Specifically, “no nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable”.

The definition of “pre-dispute” remains an open question. Whether that means agreements signed before a claim is asserted or before the first instance of harassment or assault is unclear and will be left up to the courts to decide.

2023 Outlook: Despite the passage of the Speak Out Act, the issue is far from settled. Expect reintroduction of the House-passed FAIR Act (H.R. 963), which is much broader than the Speak Out Act and would ban all mandatory pre-dispute arbitration agreements in employment and consumer contracts.