Utah has recently passed a law that changes the way employers can use non-disclosure agreements (NDAs) when it comes to sexual misconduct in the workplace. Inspired by the #MeToo movement, this law was signed by Governor Spencer Cox on March 13, 2024, and adds Utah to the growing number of states taking a stand against NDAs that silence victims. Here’s a breakdown of what this new law means for employers and employees in Utah.
What Does Utah’s New NDA Law Prohibit?
The law makes it illegal for employers to require employees or job applicants to sign NDAs that prevent them from discussing sexual misconduct as a condition of employment. Essentially, Utah employers can no longer make job offers contingent on signing an NDA that forbids disclosing information related to sexual harassment or assault. Additionally, the law protects employees from retaliation if they report sexual misconduct or refuse to sign an NDA that violates this new regulation.
This law is retroactive, meaning it applies to any NDA or non-disparagement agreement signed on or after January 1, 2023. If an employer tries to enforce an NDA that goes against this law, they could be held responsible for covering all legal costs and attorneys' fees associated with the lawsuit.
What Is Still Allowed Under the New Law?
The new restrictions don’t ban all NDAs. Employers in Utah can still use NDAs to protect proprietary or confidential business information. Also, employers and employees can agree to confidentiality clauses in settlement agreements that this law would normally prohibit, but employees have the right to back out of such agreements within three days of signing.
Moreover, if the employee wishes, both the employer and the employee can agree not to disclose the settlement amount or any details that could identify the employee who has alleged sexual misconduct.
Next Steps for Employers
This law affects any business with employees in Utah, even if the company is based elsewhere. Employers should take the following steps to ensure compliance:
Review Existing NDAs: Audit current NDA forms to ensure they don’t include language that violates Utah’s new law. SixFifty can help automate this review process.
Check NDAs Signed After January 1, 2023: Review any NDAs signed by Utah employees after this date to ensure they comply with the new regulations.
Revise Non-Disclosure and Non-Disparagement Provisions: Make sure these provisions are not so broadly written that they could be interpreted as preventing disclosure of sexual misconduct. It’s a good idea to include explicit language stating that the NDA does not restrict sharing information about sexual harassment or assault.
Lastly, avoid including NDAs related to sexual misconduct in settlement agreements unless requested by the employee. These agreements should clearly inform the employee of their right to withdraw from the settlement within three days of signing.
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