The List of States Regulating Non-Disclosure Provisions Continues to Grow

6 min


From the day the #MeToo movement went viral on social media more than seven years ago, it has sparked critical discussions about sexual harassment, assault, and abuse in all corners of industries, communities, and cultures. At times, the workplace has been its epicenter, after being plagued by recurrent issues due to power dynamics, fear of retaliation, and a culture of silence. How organizations have tried to address or contain these problems—typically through non-disclosure provisions in settlement agreements—has become a source of controversy and has drawn the ire of legislatures around the country.

Non-disclosure provisions are still widely and lawfully used by employers. Their purpose is simple: to protect information. When an employee has access to trade secrets, strategic plans, customer lists, marketing strategies, and more, an employer would lose crucial advantages if the employee were to leave and use that information for any purpose outside of their employment. Employers also elect to settle claims by employees to avoid the costs and disruption of litigation.

However, the #MeToo movement invigorated lobbying efforts at the state and federal levels targeting the use of non-disclosure provisions to prevent victims of sexual harassment and assault in the workplace from making their stories public. Nearly 20 states have passed laws restricting their use in dealing with sexual misconduct in the workplace, including Arizona, California, Colorado, Hawaii, Illinois, Louisiana, Maine, Maryland, Nevada, New Jersey, New Mexico, New York, Oregon, Tennessee, Utah, Vermont, Virginia, and Washington. The breadth of the laws differs from state to state, and sometimes greatly so, requiring employers to stay informed about their abilities and inabilities to use non-disclosure provisions and the potential consequences of doing so.

Utah is the latest entrant to this growing list of state legislatures that have acted. In March 2024, the Utah Antidiscrimination Act was amended to provide that non-disclosure and non-disparagement clauses regarding sexual misconduct required as a condition of employment are unenforceable, applying retroactively to January 2023. Moreover, Utah’s law prohibits retaliation against an employee for (1) making an allegation of sexual harassment or assault or (2) refusing to enter into an agreement or employment contract that contains such a non-disclosure or non-disparagement clause. However, in contrast to states like Illinois, New York, and New Jersey, Utah’s law does not prohibit an agreement between an employer and employee who alleges sexual misconduct from containing a non-disclosure or non-disparagement clause.

In 2023, New York amended its non-disclosure provision law and further restricted the use of its provisions in certain workplace settlement agreements, except when employers enter into an agreement that establishes a fixed term of service, prohibits disclosure of trade secrets, or prohibits solicitation of clientsThe amendments (1) expanded the law’s non-disclosure provision requirements to settlements, agreements, or other resolutions involving claims of harassment or retaliation in violation of laws prohibiting discrimination; (2) expanded the law’s notice requirements to independent contractors; (3) prohibited settlement agreements involving claims of unlawful discrimination from including a term or condition that requires complainants to (A) pay liquidated damages or forfeit all or part of the consideration for the agreement if they violate a non-disclosure or non-disparagement clause or (B) make an affirmative statement, assertion, or disclaimer that they were not subject to unlawful discrimination; and (4) removed a 21-day waiting period for complainants to sign the non-disclosure agreement. The change now allows complainants to sign the agreement earlier if they choose. Complainants will still have seven days to revoke their consent to the agreement.

Under New Jersey’s law, any non-disclosure clause in a severance agreement or settlement agreement (or any employment agreement) that has the purpose or effect of concealing the details related to a claim of discrimination, retaliation, or harassment on the basis of any characteristic is now “voidable” at the option of the employee. The New Jersey law allows the parties to agree to a non-disclosure provision, but it does not prevent employees from breaking confidentiality. Conversely, an employer remains bound by a confidentiality provision unless “the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable,” in which case the employer may disclose relevant facts about the matter but has no legal remedy against the employee.

While no state has yet completely banned non-disclosure provisions post-dispute, Washington state’s law is an example of one with the most restrictive prohibitions. Washington’s law bars confidentiality clauses, both pre-dispute and post-dispute, related to discrimination, harassment, retaliation, or assault, even when an employee requests them. Signed into law in 2022, Washington’s law also retroactively voids all blanket non-disclosure and non-disparagement clauses entered into as a condition of employment, irrespective of when they were signed. The retroactive nature of Washington’s law stands in contrast to states that have also been aggressive in curtailing non-disclosure provision usage, like California and New York, which banned agreements entered into after a date certain. Washington also has harsh penalties for employers that attempt to enforce illegal non-disclosure provisions by imposing hefty fines and actual damages, in addition to paying an employee’s attorneys’ fees. Other states, like Colorado, which passed its own version, similarly have stiff consequences for violations, including a $5,000 penalty for each instance.

The federal government has entered the conversation as well. In 2022, President Biden signed the bipartisan Speak Out Act, which prohibits the enforcement of non-disclosure and non-disparagement provisions in pre-dispute agreements in cases involving sexual harassment or sexual assault claims, for both employees and independent contractors. The Speak Out Act does not apply to, or otherwise prohibit, non-disclosure and non-disparagement agreements concerning sexual misconduct entered into by an employee after a dispute arises.

Employer Takeaways and Considerations

In light of the ever-growing number of states enacting laws regulating non-disclosure and non-disparagement provisions and agreements and the federal government’s Speak Out Act, employers should review their existing policies and agreements that include non-disclosure and non-disparagement provisions. Employers should also be mindful of the varying state and local laws that provide increased protections for victims of discrimination, harassment, and retaliation, depending on the location of their workforce. A few questions employers should consider now:

  • Do your employment agreements and settlement agreements have non-disclosure or non-disparagement clauses that could become unenforceable?
  • Have you removed any offending language in your standard non-disclosure provisions and agreements based on the agreement’s chosen jurisdiction?
  • Do you have a system in place to monitor any changes that come into effect as more states enact and amend their laws regulating non-disclosure provisions?

The enforceability of non-disclosure provisions in employment contracts and settlement agreements is an evolving area of law and is changing considerably from state to state. If you have questions about how to structure non-disclosure agreements and provisions where you do business, please do not hesitate to contact the authors of this article or any member of Venable’s Labor and Employment Group.