Wall Street's silencing of sexual harassment curbed by U.S. 'Speak Out Act'

A major hurdle for employees who want to speak out about workplace sexual harassment is poised to be removed — with significant ramifications across Wall Street, which has lagged behind the rest of corporate America in scaling back nondisclosure agreements.

President Biden is expected to sign the so-called Speak Out Act after the bill was passed by the House on a 315-109 vote Wednesday and approved by the Senate in September. The new law will prohibit employers from enforcing nondisclosure agreements and nondisparagement clauses — often signed on the first day of employment, and sometimes unknowingly — that stop workers from discussing any incidents of sexual harassment or assault occurring months or years later.

Mark Kauzlarich/Bloomberg

The new law could have a broad impact on Wall Street, where all but one of the six biggest U.S. banks are run by men, and issues of gender discrimination and inequality have proliferated for decades.

Confidentiality agreements can still be found in employment contracts at boutique hedge funds, private equity firms, and other smaller finance firms, according to Wigdor partner David Gottlieb, who has represented workers at major banks. Companies such as Salesforce and Microsoft, meanwhile, have limited their employee agreements to make misconduct easier to report and more transparent.

"It is so inane that NDAs can be this vast," former Fox News anchor Gretchen Carlson, an early figure in the #MeToo movement, said in an interview. Her policy group, Lift Our Voices, backed the bill. "It's even hard to describe — you can't believe that all of these people are silenced on the first day."

Long history

The history of sexual harassment on Wall Street is a long one and spans the industry. Goldman Sachs Group paid more than $12 million to keep quiet allegations that top executives made vulgar and dismissive comments about women, Bloomberg News reported this week. Employees of firms including Cantor Fitzgerald and Morgan Stanley have complained over the years of being sexually harassed at work.

A state law in New York limits confidentiality linked to settlement agreements, allowing for it only if the employee bringing the complaint wants it and calling for a 21-day waiting period to consider the option. The new federal law fills in gaps left by the state legislation, nullifying agreements signed before any harassment arises, and applies to more workers by reaching across the nation.

"It was a hole that was there before, and it should be closed up," said Samuel Estreicher, a professor at New York University School of Law. "I don't think there's any good reason to have that stuff in there anyway."
The change in legislation also will let employees speak out if they see mistreatment of colleagues, said Julie Roginsky, a Lift Our Voices co-founder and former Fox News contributor.

Witnessing harassment

"If somebody is sexually harassed in front of others, this law would allow the witnesses to the sexual harassment to also disclose," she said. "It affects the workplace culture, and this is how you affect the paradigm in the American workplace."

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The new legislation doesn't apply to all forms of discrimination. A worker covered by an NDA who alleges she was paid less than her male colleagues because of her gender, for example, won't have any additional freedom to speak out. Other forms of harassment — based on an employee's race or religion, for instance — also aren't covered by the new law.

Earlier this year, Biden signed a bill banning mandatory arbitration for workplace sexual harassment and assault claims, allowing them to be heard in court rather than the more secretive system. That law, much like the legislation passed by the House Wednesday, narrowly pertains to sexual harassment and assault allegations.

With the new law in place, Wall Street firms "are going to have to be more concerned" about sexual harassment, and "upper-level management will have to spend more time to put the message out that we cannot have this happen," said Merrick Rossein, a professor at the City University of New York School of Law.

"This, in a way, may empower women to have a little more power in the settlement discussions," he said.

"Women can say, for example, 'I have the ability to disclose this — this is going to cost you more money.' "