Employers may need to adjust their practices and policies to comply with the Speak Out Act, which invalidates nondisclosure agreements (NDAs) and nondisparagement agreements designed to keep employees from discussing instances of sexual harassment and sexual assault.

President Joe Biden signed the law on Dec. 7, 2022, and it took effect immediately.

It's common for employers to require employees to sign nondisclosure and nondisparagement clauses during hiring, in severance agreements and in legal settlements. During the last several years, the #MeToo movement revealed that NDAs were often used to hide repeated sexual harassment and assault by executives or other high-profile employees, preventing victims from talking about the misconduct publicly. The new law is designed to stop companies from covering up misconduct. It applies only to nondisclosure and nondisparagement agreements signed before a dispute arises, not after.

With the new law, there's greater risk to employers in brand damage and career risk for executives, said Stephen Paskoff, CEO of the workplace training company ELI in Atlanta and a former employment law litigator. That's why it's important to "focus on getting people to prevent the underlying issues that necessitate arbitration and NDAs. Settlements that pay people off won't be as potent as they were in the past."

Companies are increasingly including clauses in CEO contracts that allow for termination without severance pay in cases of sexual harassment,...

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