Utah prohibits non-disclosure agreements for sexual harassment and misconduct

Harvey Weinstein, originally known as the co-founder of Miramax, has become infamous as a byword for sexual misconduct. Over the course of at least two decades, he sexually assaulted and harassed multiple women, successfully concealing his actions through the use of non-disclosure agreements. It wasn’t until a courageous woman spoke out that his sexual misconduct was put to an end.

Non-disclosure agreements are common in settlement agreements. Employers often include confidentiality restrictions when regulating sexual harassment, misconduct and irregularities in the workplace. Naturally, they do not want such accusations to tarnish the company’s reputation. But as in the case of Weinstein, the silence allows sexual harassment and predators to flourish. Accordingly, some states and government agencies are taking action to end this practice, encouraging victims to speak out against sexual harassment and assault. Utah recently became one of the states to ban such agreements.

Amendments to Employment Confidentiality

Utah is the latest state to restrict confidentiality agreements that prohibit employees from filing sexual harassment claims. In February 2024, the Utah Legislature passed HB 55, the Employment Confidentiality Amendments, which are intended to prevent employers from enforcing such non-disclosure agreements. The governor signed the bill into law on February 28.

The new law is intended to provide and/or encourage victims of sexual harassment and assault to speak out and prohibits certain contractual provisions that would prevent disclosure of the facts surrounding the harassment or assault. The legislation focuses on certain non-disparagement and confidentiality clauses relating to sexual misconduct.

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

In particular, any confidentiality or non-disparagement clause (i.e., a clause prohibiting negative comments) on the employer regarding a sexual misconduct allegation that an employer requires an employee to sign as a condition of employment is “contrary to public order.” The law therefore considers such a confidentiality clause to be ‘void and unenforceable’. Similarly, an employee can withdraw from a settlement agreement that contains a confidentiality or non-disparagement clause regarding sexual misconduct within three days of signing the contract.

The law also prohibits retaliation against an employee who refuses to sign a contract that contains such a confidentiality clause. An employer who attempts to enforce a prohibited clause cannot be awarded damages for violating the clause. Instead, the employer will be liable for reasonable attorneys’ fees and all costs resulting from such legal action.

However, the legislation does not prohibit confidentiality terms that prohibit disclosure of other terms of a settlement. For example, settling parties may agree to keep the amount of a monetary payment or settlement confidential. Settlement parties may also agree to retain confidential information that could identify any victims.

The new law also does not affect traditional non-disclosure agreements that prohibit the disclosure of confidential, proprietary or trade secret information not related to sexual misconduct.

The law also prohibits retaliation against anyone who reports or alleges sexual harassment or assault in the workplace. This should provide victims and others with knowledge of sexual harassment so that they will not be subject to adverse employment measures for speaking out. At the very least, it provides them with a remedy if they face adverse employment action for reporting sexual misconduct.

This retaliation ban applies to every employer in the state, regardless of size or number of employees. This differs slightly from the anti-retaliation provisions of the Utah Anti-Discrimination Act, which only applies to employers with at least fifteen employees.

The legislature introduced the new legislation retroactively. Any such non-disclosure agreements or claims agreed to by the parties on or after January 1, 2023 will not be enforceable. The retroactive effect is therefore just over a year. As a result, several such provisions may be automatically declared invalid.

It comes down to

You must immediately stop using any confidentiality or non-disparagement provisions related to sexual harassment or misconduct. You also should not try to enforce an agreement that you have already had an employee sign.

Ryan Frazier is a shareholder at Kirton McConkie and can be reached at [email protected].