Survivors of sexual abuse gather outside the courthouse before the arrival of Harvey Weinstein at ... [+]
Notable Federal Laws Enacted in Response to the #MeToo Movement
The Tax Cuts and Jobs Act (TCJA) from 2017 amended the Internal Revenue Code to change how companies take tax deductions for money used to settle claims of sexual harassment or abuse. If an employer wants a tax deduction for the costs of settling a sexual harassment claim, they won’t be able to also include a nondisclosure agreement as one of the terms in the settlement. In other words, if the employer wants the worker to stay quiet about what happened to them, the employer can’t take the tax deduction for the money spent to settle the case.
In March 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Harassment Act of 2021 into law. This law lets employees sue employers in court for sexual harassment and/or sexual abuse claims, even if the employee signed an arbitration agreement stating that such disputes must be arbitrated. This law also permits employees to bring class action lawsuits for sexual harassment and abuse claims even if they previously waived the right to do so.
In late November, Congress passed a proposed law (it hasn’t been signed by President Biden as of the time of this writing, but it’s fully expected he will sign it) called the Speak Out Act. This law takes the next step in protecting victims of sexual abuse and assault in the workplace.
An Overview of the Speak Out Act
The Speak Out Act (SOA) is an unusual example of bipartisanship in Washington. The Senate passed it with unanimous consent and the House of Representatives passed it by a vote of 315 to 109. What the SOA does is relatively straightforward: it prohibits the enforcement of pre-dispute nondisclosure or non-disparagement clauses regarding allegations of sexual harassment or assault. To better understand what this law does, we need to break it down a bit.
One of the important details about the SOA is that it only applies to pre-dispute non-disparagement and nondisclosure agreements. These are contracts that parties enter into before a dispute arises regarding one or more claims of sexual harassment or abuse.
The term “dispute” is fairly broad in that it can refer to a full-blown lawsuit or a charge filed with an administrative agency, like the U.S. Equal Employment Opportunity Commission (EEOC). It might even refer to an individual having an attorney send an employer a demand letter following alleged sexual harassment in the workplace.
Imagine an employee sues an employer for on-the-job sexual harassment. Before trial, they settle the case and the settlement agreement includes a nondisclosure provision that bars the employee from discussing the case with anyone else. This provision would be enforceable because it’s not affected by the SOA. That’s because the parties would have entered into a post-dispute nondisclosure agreement and the SOA only applies to pre-dispute nondisclosure and non-disparagement clauses.
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A Deeper Look at the Speak Out Act
As good as this law is, it has some limitations. The most notable one is that it only applies to pre-dispute non-disparagement and nondisclosure provisions. The whole point of refusing to enforce a nondisclosure or non-disparagement clause is to allow victims of sexual abuse and harassment the opportunity to tell or warn others. But the SOA is inapplicable in situations where many individuals enter into nondisclosure or disparagement clauses for sexual harassment or abuse claims.
Despite these issues with the law, it still represents positive progress and it’s better than nothing. Even though it permits the enforcement of post-dispute non-disparagement and nondisclosure provisions, it at least gives the victim a more fair chance to make an informed decision on whether to agree to it.
For instance, most people don’t go into their first day of work thinking they’ll be the victim of sexual harassment. So it’s not surprising that they’re likely to agree to contractual provisions restricting their ability to talk about something they don’t expect to ever become a problem. The SOA would protect workers in these situations.
But fast forward a few years and the employee endures sexual harassment at work. They file a sexual harassment lawsuit against the employer and are contemplating settling it. Now they know what’s happened to them and what they could receive in return for staying silent. The SOA doesn’t apply here, but at least the employee can make an informed decision on what to do and negotiate for something in return for signing away some of their rights.
Another positive of the SOA is that it could help pave the way for the creation of similar laws. For example, it might eventually lead to a new law that isn’t limited to just pre-dispute nondisclosure or non-disparagement clauses.
It may also lead to parallel laws that apply to instances of racial, gender or other forms of discrimination. Some states have already enacted their versions of the SOA, but are more expansive in that they apply to other workplace issues in addition to sexual harassment or assault. Some of these states include:
- New Jersey
- Washington State
- California
- New York
Bottom Line
The SOA has its problems, but signals a continued positive trend of making it easier for victims of sexual harassment and assault to talk about what happened to them and successfully take legal action against those responsible.
