The California legislature has now completely repealed non-disclosures clauses contained in settlement agreement for claims arising out of any workplace harassment or discrimination. This new legislation will have sweeping affects in California, and could affect employees who work outside of California for employers with ties to California.
On October 7, 2021, California Governor Gavin Newsom signed SB 331, known as the “Silenced No More Act,” that will nullify and make void provisions within any agreement that prevent or restrict an employee from disclosing factual information of any type of harassment, discrimination, or retaliation. The new law is set to take effect on January 1, 2022.
SB 331is an expansion of the current law, SB 820, that placed a limitation on non-disclosure clauses solely as to allegations of sexual harassment and sexual assault. SB 820, known as the “Stand Together Against Non-Disclosure Act” or “STAND”, was passed in 2018 in response to the national “Me Too” movement. SB 820 prohibited the use of confidentiality provisions in settlement agreements for actions including claims based on sex. Due to SB 820, employees, or former employees, were free to discuss the facts surrounding their claims of sexual harassment or assault even after signing a settlement agreement.
Under SB 331, these rights will extend beyond victims of sexual harassment and assault. Now, victims of discrimination and harassment on the basis race, religion, color, national origin, ancestry, disability, medical condition, familial status, sex, gender, age and other protected characteristics will be free to discuss the facts of their claims even after settlement, whether they continue working for the employer or not.
SB 331 also prohibits the use of non-disparagement clauses in settlement and severance agreements. However, employers can include a non-disparagement clause so long as the agreement informs employees of their right to disclose workplace conduct the employee has “reason to believe” is unlawful.
Lastly, SB 331 does allow employers to continue to include confidentiality clauses as to the amount of a settlement.
California is currently the only state with such broad restrictions regarding the use of non-disclosure and non-disparagement clauses. It is uncertain how this law will be interpreted for people who work outside of California but their employer is based in California.
Regardless, SB 331 will have a major impact on settlement negotiations regarding workplace harassment and discrimination. Many employers settle their claims on the basis that they can keep the alleged conduct quiet. Will more employers elect to push further through litigation? We will have to wait in see. We will further wait and see if other states follow California’s lead and enact similar legislation.
Contact Grewal Law PLLC if you have any questions regarding settlement agreements, severance agreements, or the terms contained therein.
Tim represents clients in the areas of Employment Law, Administrative Law, Family Law, Contracts, Business Litigation, Personal Injury, and Probate Law. Tim maintains a strong desire to help those in need and spends the time necessary to provide honest legal guidance.
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