Diversity & Inclusion, HR Management & Compliance

Utah Bans Nondisclosure Agreements for Sexual Harassment and Misconduct

Harvey Weinstein, originally known for being a cofounder of Miramax, has infamously become synonymous with sexual misconduct. Over the course of at least 20 years, he sexually assaulted and harassed multiple women, successfully concealing his actions by using nondisclosure agreements. It wasn’t until one brave woman spoke up that an end was put to his sexual misconduct.

Nondisclosure agreements are common in settlement agreements. Employers frequently include nondisclosure restrictions in settling sexual harassment, misconduct, and improprieties in the workplace. Naturally, they don’t want such allegations to affect the company’s reputation. But, as in Weinstein’s case, silence allows sexual harassers and predators to flourish. Accordingly, some states and government entities are taking action to end this practice, thereby encouraging victims to speak out against sexual harassment and assault. Utah recently became one of the states prohibiting such agreements.

Employment Confidentiality Amendments

Utah is the latest state to restrict confidentiality agreements that prohibit workers from making sexual harassment claims. In February 2024, the Utah Legislature passed H.B. 55, the Employment Confidentiality Amendments, which is aimed at preventing employers from enforcing such nondisclosure agreements. The governor signed the bill on February 28. 

The new law is designed to allow and/or encourage victims of sexual harassment and assault to speak out and prohibits certain contract provisions that would prevent the disclosure of the facts surrounding the harassment or assault. The legislation targets certain nondisparagement and nondisclosure clauses relating to sexual misconduct.

Importantly, the new legislation forbids employers from using or enforcing agreements or contractual clauses that prohibit employees from disclosing or discussing sexual harassment or assault and making negative statements about the employer regarding sexual assault or harassment.

Specifically, any confidentiality or nondisparagement clause (i.e., one that prohibits negative comments) about the employer regarding a sexual misconduct claim that an employer requires an employee to sign as a condition of employment is “against public policy.” So, the statute deems such a confidentiality clause “void and unenforceable.” Likewise, an employee can back out of a settlement agreement containing a confidentiality or nondisparagement clause regarding sexual misconduct within three days of signing the contract.

The law also bans retaliation against an employee for refusing to sign a contract containing such a confidentiality clause. An employer that attempts to enforce a prohibited clause can’t be awarded damages for breach of the provision. Rather, the employer is liable for reasonable attorneys’ fees and all costs resulting from such legal action.

However, the legislation doesn’t prohibit nondisclosure terms that forbid the disclosure of other terms of a settlement. For example, settling parties could agree to keep the amount of any monetary payment or settlement confidential. Settling parties could also agree to keep confidential information that would identify any victims.

Also, the new law has no bearing on traditional nondisclosure agreements that prohibit the disclosure of confidential, proprietary, or trade secret information that’s unrelated to sexual misconduct.

The statute also prohibits retaliation against someone for reporting or alleging workplace sexual harassment or assault. This should provide victims and others with knowledge of sexual harassment with some comfort that they won’t be subjected to adverse employment action for speaking out. At the very least, it gives them a remedy if they’re subjected to adverse employment action for reporting sexual misconduct.

This retaliation prohibition applies to any employer in the state regardless of size or number of employees. This is a little different from the antiretaliation provisions of the Utah Antidiscrimination Act, which applies only to employers with at least 15 employees.

The legislature made the new legislation retroactive. Such nondisclosure agreements or claims to which parties agreed on or after January 1, 2023, can’t be enforced. So, the retroactive effect is a little more than a year. The upshot is that several such provisions may be automatically invalidated. 

The Bottom Line

You should immediately discontinue the use of any nondisclosure or nondisparagement provisions that relate to sexual harassment or misconduct. You also shouldn’t attempt to enforce one you’ve already had an employee sign. 

Ryan Frazier is a shareholder at Kirton McConkie and can be reached at rfrazier@kmclaw.com.

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