Employers may need to reconsider how they use nondisclosure agreements (NDAs) in the wake of recent congressional action and new state laws.
The U.S. House of Representatives on Nov. 16 passed the Speak Out Act, which prohibits the use of nondisclosure and nondisparagement agreements in cases of sexual harassment or sexual assault. The bill passed the Senate on Sept. 29.
The Speak Out Act applies only to contracts signed before a dispute arises, not afterward, and does not cover other workplace misconduct, such as age or race discrimination.
The bill now heads to President Joe Biden, who has expressed support for its passage. Earlier this year, Biden signed a law to ban forced arbitration in cases involving sexual harassment or sexual assault.
"The consistency of nationwide application should make the law more forceful and give it more cultural buy-in at every level within corporations," said Kenya Davis, an attorney with Boies Schiller Flexner in Washington, D.C.
In recent years, it's become more common for employers to require workers to sign nondisclosure agreements when they are hired, accept a severance payment or reach a settlement in a lawsuit.
"NDAs are meant to settle such disputes with provisions that the matter will be kept confidential to avoid bad publicity, but companies no longer have this cushion to rely on," said Stephen Paskoff, CEO of Employment Learning Innovations in Atlanta and a former investigator with the U.S. Equal Employment Opportunity...
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