Utah bans nondisclosure agreements in cases of sexual harassment and misconduct

Harvey Weinstein, originally known as the co-founder of Miramax, has become infamous and synonymous with sexual misconduct. Over the course of at least 20 years, he sexually assaulted and harassed multiple women and successfully covered up his actions through non-disclosure agreements. It was only when a brave woman came forward publicly that his sexual misconduct was put to an end.

Non-disclosure agreements are common in settlement agreements. Employers often include confidentiality provisions when settling cases of sexual harassment, misconduct and workplace irregularities. Of course, they don’t want such allegations to damage the company’s reputation. But as in the Weinstein case, silence allows sexual harassers and perpetrators to thrive. For this reason, some states and government agencies are taking action to end the practice and encourage victims to speak out against sexual harassment and assault. Utah recently became one of the states that bans such agreements.

Changes to confidentiality in employment relationships

Utah is the latest state to restrict confidentiality agreements that prohibit employees from reporting sexual harassment. In February 2024, the Utah Legislature passed HB55, the Employment Confidentiality Amendments, which are designed to prevent employers from enforcing such confidentiality agreements. The governor signed the bill on February 28.

The new law is designed to empower and encourage victims of sexual harassment and sexual assault to come forward. It prohibits certain contract clauses that would prevent disclosure of the facts surrounding the harassment or assault. The legislation targets certain non-disparagement and confidentiality clauses related 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., one that prohibits negative comments) about the employer in relation to an allegation of sexual misconduct that an employer requires an employee to sign as a condition of employment is “contrary to public policy.” The law therefore considers such a confidentiality clause to be “void and unenforceable.” Similarly, an employee may withdraw from a settlement agreement that contains a confidentiality or non-disparagement clause relating to sexual misconduct within three days of signing the contract.

The law also prohibits retaliation against an employee who refuses to sign a contract containing such a confidentiality clause. An employer who attempts to enforce a prohibited clause cannot recover damages for violating the provision. Rather, the employer is liable for reasonable attorneys’ fees and all costs incurred in such legal action.

However, the law does not prohibit confidentiality clauses that prohibit disclosure of other terms of a settlement. For example, the parties to a settlement could agree to keep the amount of a monetary payment or settlement confidential. The parties to a settlement could also agree to keep confidential information that could be used to identify potential victims.

In addition, the new law does not affect traditional nondisclosure agreements that prohibit the disclosure of confidential or proprietary information or trade secrets unrelated to sexual misconduct.

The law also prohibits retaliation against someone who reports or alleges sexual harassment or assault in the workplace. This should give victims and others who have experienced sexual harassment some reassurance that they will not face negative workplace action for speaking up. At the very least, it will give them a remedy if they face negative workplace action for reporting sexual misconduct.

This ban on retaliation applies to all employers in the state, regardless of size or number of employees. This is slightly different from the anti-retaliation provisions of Utah’s anti-discrimination law, which only applies to employers with 15 or more employees.

The legislator has introduced the new legislation retroactively. Such confidentiality agreements or claims agreed by the parties on or after January 1, 2023 cannot be enforced. The retroactive effect is therefore just over a year. The result is that several such provisions could automatically become invalid.

The conclusion

You should immediately stop applying any confidentiality or non-disparagement provision that relates to sexual harassment or misconduct. Nor should you attempt to enforce a provision that an employee has already signed.

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