Legislative lowdown: Utah law makes NDAs regarding sexual misconduct unenforceable

Employment contracts or settlement agreements containing nondisclosure agreements (NDAs) or non-disparagement clauses pertaining to sexual misconduct allegations are now void under Utah state law.

Utah Gov. Spencer J. Cox signed a bill limiting the use of employee NDAs or non-disparagement clauses into law on Feb. 28. It amends the state’s antidiscrimination act, and makes any clauses that employees are asked to sign demanding confidentiality regarding sexual misconduct “void and unenforceable.”

The law is retroactive, and applies to any clauses signed from Jan. 1, 2023.

Under the new policy, Utah employers are also barred from retaliating against employees who make sexual harassment or assault allegations. Retaliating against employees who refuse to sign a confidentiality clause or employment contract that “as a condition of employment, contains a confidentiality clause,” is also prohibited.

Employees who agree to a settlement agreement with a confidentiality clause pertaining to sexual misconduct have three business days to withdraw from the agreement under this law.

More states limit NDAs post-MeToo. Laws limiting NDAs are part of a wider body of workplace legislation passed in the wake of the #MeToo movement. More than a dozen states, including California, New York, Illinois, and Washington, have laws limiting NDAs on the books.

In December 2022, President Joe Biden signed the Speak Out Act, which limits enforcement of NDAs related to sexual misconduct before a dispute arises.

Utah employers should review “employment, separation, severance and settlement agreements” to make sure they comply with the state’s new NDA law, attorneys with law firm Littler advised in a blog post. Their suggestions include revising clauses in “confidentiality agreements and company policies that could be considered to limit current employees from discussing sexual harassment or assault,” as well as limiting clauses in settlement agreements “to exclude communications regarding sexual harassment or assault unless requested by the employee.”