By Cynthia Gentile, J.D., SHRM-CP, Faculty Member, Dr. Wallace E. Boston School of Business
Ivy Kempf, attorney, Faculty Member, Peirce College
In December 2022, President Biden signed into law the Speak Out Act, which essentially invalidates non-disclosure (NDA) or non-disparagement agreements in cases involving sexual assault or sexual harassment. American Public University professor Cynthia Gentile talks to attorney Ivy Kempf about how this bipartisan legislation arose from the #MeToo movement and the nuances of this new federal legislation and similar state laws that continue to amend employee protections.
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Read the Transcript:
Cynthia Gentile: Welcome to the podcast. I’m your host, Cynthia Gentile, and I’m excited to welcome back Professor Ivy Kempf. Hi, Ivy. How you doing today?
Ivy Kempf: I’m great, Cyndi. How are you doing?
Cynthia Gentile: I’m doing great and I’m really looking forward to talking about this new or somewhat new law, the Speak Out Act and its impact on employment and labor law.
Ivy Kempf: Me too. It’s a pun that you’ll get later.
Cynthia Gentile: So we’ve done a couple podcast episodes on hot topics in the employment law space. This is just another topic that I’m excited to be able to tackle with you because the Speak Out Act is one more recent law that is changing the landscape of work in the United States.
President Biden signed the Speak Out Act in December of 2022. I just want to give a little background on the law. It’s an outgrowth of the #MeToo movement that gained traction on Twitter in early 2016. The movement’s founder, Tarana Burke, is a survivor of sexual assault. She coined the phrase “Me Too” in 2006, but it took another 10 years for it to really pick up speed in the public sphere.
The Speak Out Act is important in the context of Me Too because it really serves to empower victims of sexual harassment and sexual assault in their efforts to hold their employers liable for behavior that is in fact illegal.
So, what the Speak Out Act does is it invalidates any non-disclosure agreement or non-disparagement agreement that are often included in employment contracts. Ivy, did you know that even before the Speak Out Act, Congress had passed in a bipartisan manner some legislation that limited arbitration in cases involving sexual assault and sexual harassment?
Ivy Kempf: I did not know that.
Cynthia Gentile: We have a law that was passed just a few months really before the Speak Out Act, and that is the kind of a long title, “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act,” which was signed in March of 2022.
This amends the Federal Arbitration act and allows employees that are subject to any type of pre-dispute, mandatory arbitration agreements to actually go to court and make their case on any claim related to sexual assault or sexual harassment. So that way those employees or those people who have suffered sexual assault or sexual harassment have a choice as to how to pursue their cases.
Ivy Kempf: So, they’re not just forced into arbitration now?
Cynthia Gentile: They’re not. Previously, if there was an arbitration agreement signed between an employer and an employee that stands, but because of this Ending Forced Arbitration Act, if the case involves sexual harassment or sexual assault, then the employee or the victim has the opportunity to take that case directly to the court.
Ivy Kempf: That’s fantastic.
Cynthia Gentile: So what this does is it preserves the litigants access to the court rather than forcing them into arbitration. It also makes it illegal to compel a party to remain silent to sexual harassment or assault because many arbitration agreements contain something that protects confidentiality.
Before the Speak Out Act, corporations could limit bad press by silencing current and former employees, and that silence was guaranteed through the use of non-disclosure agreements or non-disparagement agreements.
Ivy Kempf: What’s the difference between those two? What are they? We want to help our listeners understand?
Cynthia Gentile: That’s a great question. So, I want to just give a quick kind of overview of each because really they’re neutral in their intent. It’s just how they have been used that makes them a little less neutral.
So, nondisclosure agreements or NDAs as they are sometimes called are legally enforceable agreements between any two parties or more than two parties that are used to ensure that certain information will remain confidential. It’s not strictly limited to employment context, but it is used quite a bit in an employment context.
Non-disparagement agreements are usually just a clause or some language that is added to an employment agreement or maybe part of a severance package, which requires that employees, or former employees, don’t disparage their employer after severing a working relationship.
Ivy Kempf: You can also see them in lease agreements sometimes. Basically what that means is you can’t talk bad about them, right? That’s what disparagement means.
Cynthia Gentile: That’s right, and with social media and all the different opportunities to talk “publicly,” you can understand that it is in the interest of the corporation, in our context, to want to limit that speech. However, what it has done is really limited the ability for employees and victims to have their cases heard and to receive restitution, whether it’s in the civil context or beyond.
So, the Speak Out Act, which was codified the end of 2022, makes these pre-dispute agreements unenforceable if they involve cases of sexual harassment or sexual assault. So, Ivy, do you want to tell us a little more about the Act itself?
Ivy Kempf: Sure. I’m happy to do that. So as you kind of described already, these NDAs have been in the hiring process, have been used during the hiring process for many, many years. They’re also used in those severance agreements. Even in those legal settlements when people settle lawsuits, they can put NDAs in those agreements as well so that the employee can’t speak about the circumstances surrounding the sexual assault or disparaging the employer sometimes even in those legal settlement agreements.
So, the Me Too movement, like we noted, was really kind of the fuel to the law to this federal legislation, and it really kind of highlighted how these NDAs are being used to hide repeated sexual harassment in the workplace, and particularly by those executives, those people in power, that were using them and preventing those victims from speaking publicly about what was happening to them.
So, like Cyndi had noted, President Biden in 2022 signed this Speak Out Act into law, and what it does is it effectively prohibits or stops the use of these non-disclosure and non-disparagement agreements in the cases of sexual harassment and sexual assault.
So, it does limit it to those two types of behaviors, and it only applies to non-disclosure and non-disparagement agreements that were signed before a dispute arises, not afterwards. So, as you can see, Cyndi, you have to kind of do a timeline of when did the actual misconduct happen because that’s going to make a difference if you signed the agreement and then the misconduct happens and you then allege misconduct happening, then the employee is free to speak out about that misconduct, even though they signed the NDA because the conduct happened afterwards.
But if the conduct happened before they signed a NDA and then the employee was to sign a NDA, then they’re going to be bound by that NDA. They can’t speak publicly about the misconduct.
Cynthia Gentile: Why do you think the Act contemplates a difference in terms of why it’s enforceable before but not following?
Ivy Kempf: I don’t know for sure, but I would think that they’re trying to stop any type of argument that there was entrapment of the employer. I don’t know. What do you think?
Cynthia Gentile: So, I wondered about this too. When I looked at the timeline contemplated by the legislation, and one of the thoughts I had is that the Speak Out Act is really trying to empower victims of sexual assault and sexual harassment.
If after a dispute has already been, the event has already occurred or the events have already transpired, and the individuals are aware that a dispute has occurred, if the victim chooses to agree to a non-disclosure or non-disparagement language in a settlement agreement, Congress doesn’t want to stop that type of negotiation from being within the rights of the victim.
It could be part of a settlement that allows the victim to get different types of remuneration that they are seeking while still agreeing to keep it out of the public eye. That can benefit the employers, too, but it does serve to level the playing field between the two parties. Does that make sense?
Ivy Kempf: That does make sense. I think in the context of settlement, I think that makes perfect sense. If you have misconduct and you agree as part of the settlement agreement to basically quiet yourself as part of the settlement agreement, you can’t thereafter claim that the end date doesn’t apply to you. It’s a term of the settlement agreement.
Where it gets a little confusing is that if it’s not part of a settlement agreement, if it’s just part of the employment contract, why does the fact that it happened before you signed the NDA make a difference is that if the NDA is part of employment contract. The only other thought I had to that was that it just kind of encourages employees to come forward and report the misconduct sooner. So, maybe that’s why the timeline.
Cynthia Gentile: Here’s where I think the advent of the Me Too movement really comes into play because the public just became so much more aware about this sort of insidious, rampant sexual harassment and sexual abuse that was occurring in certain spheres that, if not for Me Too, I’m not sure that this Act would exist. What do you think, Ivy?
Ivy Kempf: I absolutely agree. I mean, I really think that was the fuel behind this Act. I think it was in response to the Me Too movement. I don’t think there’s a question about that.
Cynthia Gentile: It’s really interesting when you look at the actual text of the Act itself, and I’m not going to read the Act, it’s long. The Act itself has a section that talks about findings and these are the things that a bipartisan group of the House and the Senate agreed to.
So, some of the language, some of this is a direct quote right from the Act itself. Okay. “So Congress finds the following, sexual harassment and assault remain pervasive in the workplace and throughout civic society affecting millions of Americans.
Right there, point one, I don’t think we would have this codified and into a federal statute without Me Too.
Ivy Kempf: Absolutely. I couldn’t agree more. I think that the fact that so many people came forward with their stories, it really did spur this and there needed to be some protection to try to stop perpetrators from continuing to harm people. It started to become known that there was pervasive sexual harassment and sexual assault going on, especially from the higher ups, people with power, in the workplace. So, I think that this is, directly speaks to that.
Cynthia Gentile: Yes, I agree. So the second section in the findings actually gives some statistics. Again, super interesting to me that this is codified into the Act itself. “81% of women and 43% of men have experienced some form of sexual harassment or assault throughout their lifetime.” Then section three: “One in three women have faced sexual harassment in the workplace during her career. An estimated 87% to 94% of those who experienced sexual harassment never filed a formal complaint.”
So, I don’t think that that comes as a shock to those of us sort of working in this space. But it is amazing to me to see that this is actually in the text of the Act.
Ivy Kempf: It’s never a surprise. I guess when you see the numbers, it is just alarming even though you know how pervasive it is.
Cynthia Gentile: Very true. Again, I don’t want to just read all of the text, but there’s some other sections that continue to make pretty bold statements codifying into the United States Code about sexual harassment in the workplace and the results of that, like women leaving their jobs, leaving their occupations or industry in total and passing up opportunities for advancement because of that sexual harassment and assault. We all know people who have had to make those very difficult choices.
So, then the Act of this finding section goes on to talk a little bit about those non-disclosure and non-disparagement provisions. I think we’ve covered why those are pretty silencing or have a chilling effect on the victims of such conduct.
Here’s the statement that Congress makes as far as why I would say this is the sum in total of why this Act is important. “Prohibiting non-disclosure and non-disparagement clauses will empower survivors to come forward, hold perpetrators accountable for abuse, improve transparency around illegal conduct, enable the pursuit of justice, and make workplaces safer and more productive for everyone.”
So, I really wanted to add those points specifically because these are real data points that are now accepted within, again, this Act as being a reason why the Act had to come into existence, but it’s really worth talking about the fact that this is Congressional findings.
Ivy Kempf: Is there anything, Cyndi, in addition, I mean I think that this is very powerful legislation and I like that it has a strong result, but how about training? Is there anything about training for employees and employers in order to comply with this legislation? Is that part of the Act?
Cynthia Gentile: Yes. When we look at the section that I just read that speaks about why this Act specifically contemplates prohibiting non-disclosure and non-disparagement agreements. So, some of the results that Congress hopes to see because these agreements are banned or no longer allowed to be included in agreements or contracts, have to do with transparency around illegal conduct, have to do with making workplaces safer, making workplaces more productive. The way that corporations really can do that is through creating a culture within their workplace where the workforce is in an anti-harassment posture.
That is done first and foremost through having corporate values and a corporate mission that align with that goal. But the goal isn’t the end result, right? The goal is just sort of the goal. We need to have steps we take to get to that, to make that goal a reality.
I think that’s where training comes in, and it’s not just about legally complying with the Act. In fact, I think that’s pretty simple. If all we were doing was looking at how do you legally comply with this Act, you just remove the language of NDAs from employment contracts or settlements.
Ivy Kempf: But, I think they keep them in because they do catch other things.
Cynthia Gentile: Sure. You are definitely correct. I should have been more precise that the NDAs are only relevant here in the context of sexual assault and sexual harassment. So, employers are not going to just bar or remove those from a contract.
But, even if the contract language included something like non-disclosure agreement, except in cases of sexual assault or sexual harassment, that may be aligned with the actual letter of the law, but it doesn’t really address kind of the spirit of the Speak Out Act. That’s why I wanted to mention all the findings that Congress leaned on in its first section of the Act.
We know that corporations need to go further than just kind of fixing the language, they need to create this culture of continuously training and developing a workforce that nurtures anti-harassment values in the workplace.
Ivy Kempf: Speaking of continuing to nurture and change, which is what corporations need to do, there’s more, Cyndi, in addition to the federal legislation, there’s also state laws that have been passed, which provide additional protection on top of this federal law to employees, mostly. But that’s something that employers have to pay attention to because they not only have to comply with this federal legislation, but there’s state and even local legislation that’s been enacted to try to increase protection for victims of the sexual misconduct in the workplace.
Cynthia Gentile: There’s so much employers need to be aware of when it comes to legislation around this because like you said, it’s not just federal, it’s also going to be in the states in which you’re doing business.
Ivy Kempf: Absolutely. I took a look at some of the state legislation out there just to kind of see what was going on, and certainly I can’t cover the entire United States, but I did pull up a few states and I took a look at some of the laws out there.
One that I found kind of interesting, so, in New Jersey, we’ll start there, since they were among the first states to enact this type of legislation, and they all kind of start around 2019 to 2022, again, right on the heels of the Me Too movement, this legislation started popping up.
So, New Jersey actually amended their, they have this New Jersey Law against discrimination that was already in existence, and they amended that to try to put in there that employment contracts or settlement agreements that have “the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment” are against public policy and unenforceable against a current or former employee. So, it kind of speaks again to, you’re talking this spirit of the law, kind of puts that right in the legislation, anything that has the purpose or effect of concealing the details.
Cynthia Gentile: So, I hear you highlighting the word effect. Do you think that by using the language “purpose” or “effect” takes this even further than the Speak Out Act, right?
Ivy Kempf: I absolutely believe that. There is actually an interesting case that kind of brought about this legislation. It’s called Savage v. Township of Neptune. I’m sure we’ll put a link on the page to the case. This is a New Jersey case. An appellate panel took a look. This employee was a female police officer and she had, unfortunately, experienced sexual discrimination, harassment, and unlawful retaliation in what she claimed was a violation of this law, this New Jersey Law Against Discrimination.
In that case, they actually reached a settlement agreement. So, here we have a settlement agreement that happens after the misconduct that we just talked about earlier. That agreement contained a non-disparagement clause. Later that female police officer went onto a television interview and she noted during that interview that the Neptune Police Department had not changed and that it was still a “good old boys system.” Hence, the Neptune Police Department filed a lawsuit saying that she had violated the NDA that was in their settlement agreement. So, the court had to basically decide is this a violation, first of all. Then also they had to decide whether or not these types of non-disparagement clauses were against public policy.
They ended up deciding both in the negative. But what was interesting in this case, I thought, is that the text of the settlement agreement actually said, and I’ll read it because I think this is important, “it prohibited statements that were ‘regarding the past behavior of parties,’ which statements could tend to disparage or impugn the reputation of any party.”
So, the court said, well, her statement kind of, it didn’t talk about past behavior, it talked about the fact that it was still a “good old boy system” and that’s present and future behavior, not past behavior. So, I thought that was really interesting and the court ultimately held that it was not a disparaging statement, it didn’t violate the NDA.
They also said that NDAs were not against public policy. Then you might say, well then how can this law be in existence? Well, that’s because the legislature went back after this case happened and they went, no, yes it is. They drafted legislation. So, it’s a Senate Bill 2930 if anybody wants to take a look at it, they introduced that into the Senate to try to amend this New Jersey LAD once again, to try to add in there that non-disparagement provisions are unenforceable because they are against public policy and certain agreements. So, that bill is still pending, we’ll have to stay tuned, but that’s one in very interesting case, I thought. Let me see. We also saw some expansion of the Act in California. Do you know anything about this?
Cynthia Gentile: I do know it’s the Silence No More Act, I think is what it’s called, and I think it expands beyond sexual harassment and sexual assault. Am I right in that?
Ivy Kempf: You’re absolutely right. So, here we talked about earlier, remember NDAs were only in the federal law and only applies to sexual assault and discrimination. Here, California said, “No, we’re going to take it further.” They decided to expand it to settlement agreements regarding discrimination or harassment on the basis of age, ethnicity, disability, religion, pregnancy, which is interesting, and race, along with a couple others like national origin, and I think I said, sexual orientation. So, they really went beyond that and they’re really trying to protect more groups from harassment in the workplace.
Cynthia Gentile: I wonder if that’s kind of a harbinger of what we will see moving forward on the federal level. I know a lot of times things that happen in California is a kind of a little laboratory for what will happen next at the federal level.
It stands to reason that if California has this expanded protection for, I guess if you think about it really, it’s all the different kind of protected classes within a civil rights context. I’m quite sure there’ll be case law that’ll continue to challenge federal protections for the same.
Ivy Kempf: Absolutely. New Mexico, just to give another example, they went further too, and they apply their prohibited conduct of NDA, NDAs in sexual assault or harassment. They stick with sexual assault or harassment, but they at least expand it to anything that happens in the workplace and at any work-related events, or even coordinated by or through the employer. So, that’s kind of interesting.
Cynthia Gentile: So would that be like the Christmas party or a company retreat or a sales meeting, things like that?
Ivy Kempf: It’s exactly right. I found that to be super interesting because I would think that a lot of sexual harassment and that type of conduct can certainly happen at events off premises, if there’s alcohol provided and things of that nature. You can see how that can get a little out of hand. I never really considered the fact that maybe some of them were limiting it to the workplace until I saw New Mexico’s law.
Cynthia Gentile: What’s the workplace in 2023, right? So many of us are working from home, before we even get into the concept of the holiday party, the retreat, the sales meeting, whatever, what have you. We’re thinking about what’s the actual workplace? And this is a question that comes up in all kinds of HR-related employment law-related questions right now. It’s really interesting. I hadn’t really thought about that either. It is interesting that the federal law does kind of talk about the workplace without, as I understand it, at least defining it. But that’s what happens with federal law. We need case law to interpret it, and we need case law to tell us what it means. Any other states that are worth highlighting right now on this one?
Ivy Kempf: Well, I mean, since I’ve pretty much covered the corners, let’s go to the Midwest. We’ll look at one more, our friends in the Midwest, in Illinois, similar kind of language with banning agreements that have nondisclosure provisions that prohibit or prevent current, former, or prospective employees from reporting allegations of discrimination, harassment or retaliation.
So, this one was really interesting to me, and I’d love to hear your thoughts on this, but banning agreements that prohibit an employee makes sense or prohibit an employee from making truthful statements and disclosures and stuff. But a prospective employee I thought was very interesting. I tried to dig in to try to find out what that meant, what is it to be a prospective employee, and it’s simply defined as a person seeking to enter an employment contract with an employer.
Cynthia Gentile: That’s fascinating because it is, as I think you’re saying, that’s almost broad to the point of being, who wouldn’t fit into that category. So, I guess here again, Illinois is going to have to sort this out in case law. So, from a practical perspective, I could foresee a situation where a person was interviewing for a position and was met with some type of sexual harassing, some type of harassing behavior of a sexual nature, because we always already have protections that are in place for claims that maybe they didn’t get the job based on gender or things like that. But this definitely takes it to that next level looking specifically at conduct around sexual harassment, but in a case where an employment relationship hasn’t been created. It’s really interesting. Yeah, I don’t know how that shakes out. Much like a lot of other things. We have to see how the courts interpret it.
Ivy Kempf: Absolutely. That pretty much wraps up at least some of the state legislation that’s happening across this country. But like I said, I just barely scratched the surface. There’s so much more in there.
Cynthia Gentile: Thanks for that. I mean, there’s quite a lot of movement on this issue. We can see how these individual state actions are kind of stretching the four corners of the conversation. I think that from my perspective, kind of my closing thoughts around this is, how do we help employers and employees know how these laws either limit or curtail certain tried and true employment practices. Or in the case of employees, provide some protection and provide some leveling of the playing field, if you will.
I think that, from my perspective, we have a big kind of pillar is around training, is around ensuring that our employees are trained, our company values anti-harassment policies, but when events do occur, we need to make sure that our companies make reporting harassment claims as easy and as accessible as possible.
This could be practical steps like just simply creating online landing spots in a company intranet with reporting procedures, but it also means making sure our HR departments are staffed up to a point where these types of claims are escalated and harassment claims are treated with care, but with kind of prompt review. Ensuring that HR managers have the tools that they need and the training themselves is really critical.
That’s not new. That’s not something that changes because of the Speak Out Act. This is something that we could talk about in many different contexts, but the Speak Out Act just gives employees another sort of pillar to stand on to make a case and it puts employers in a position of potential liability in a new way.
Well, it’s great that we were able to kind of unpack this a little bit. I know it’s not a topic that we can exhaust in one podcast episode. There’s a lot going on at state level. I think everybody who is operating in a state that maybe we didn’t touch on, or even if we did, take a look at your own state and local laws, even, like I think you mentioned earlier, there could be local ordinances at play here, and you may have more protections than you think.
Ivy Kempf: Absolutely. Yep.
Cynthia Gentile: Well, thank you again, Ivy, for joining me today. This was a great conversation on an important topic, and thank you to our listeners. Be well and be safe.