The Volokh Conspiracy
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Is the "Speak Out Act" Constitutional?
What power lets Congress exempt harassment allegations from NDAs?
On Wednesday the President signed the "Speak Out Act," now Public Law 117-224. The law exempts disputes over sexual assault or harassment from pre-signed nondisclosure or nondisparagement agreements, in the hopes of encouraging survivors to come forward without fear of being sued.
Putting the policy virtues to one side, I'm wondering: what's the source of congressional authority here? A state might decide to void new NDA contracts in this way, as a matter of public policy. But if state law would enforce them, can Congress tell them not to?
Most of the standard jurisdictional-nexus clauses are missing from the Act. For example, the Act isn't limited to contracts evidencing transactions in interstate commerce, as in the Federal Arbitration Act. It isn't limited to harassment (or to contracts) that involved the channels or instrumentalities of interstate commerce, or that are otherwise governed by federal law. It isn't limited to D.C. or the territories. And it isn't limited to claims filed in federal court: it applies equally to states and localities enforcing their own laws.
There also aren't the sorts of findings that the Court sometimes looks for in enumerated-power cases. Congress found that workplace harassment forces many women out of their jobs or industries, but it's not clear how far that finding would go as a Commerce Clause matter under Lopez and Morrison. (Is the claim that entering an NDA is an economic activity, which substantially affects interstate commerce in the aggregate? Would the same be true of all of contract law?) And it found that enforcing NDAs can help shield illegal conduct, but it doesn't really make the kind of equal protection findings that Morrison might require. (If Congress can do this, why can't it just provide a federal cause of action directly?) Section Five of the Fourteenth Amendment strikes me as the closest case as an original matter, but the case law makes it an uphill battle.
So where's the federal power coming from? Con law profs preparing your fall exams, take note.
(An aside: the Act applies to existing contracts as well as future ones, extending to any contract claim to enforce an NDA that's filed from Wednesday on. If a state adopted a similarly backwards-looking provision, it might well violate Article I, § 10, which among other things bans state laws "impairing the Obligation of Contracts." The Contracts Clause was read in Blaisdell to contain an invisible-ink exception for economic emergencies, but there's no claim of economic emergency here. That said, the Clause doesn't apply to federal law, and I doubt an NDA plaintiff could make a successful Fifth Amendment challenge.)
