December 3, 2021

Volume XI, Number 337

Advertisement
Advertisement

December 02, 2021

Subscribe to Latest Legal News and Analysis

December 01, 2021

Subscribe to Latest Legal News and Analysis

November 30, 2021

Subscribe to Latest Legal News and Analysis

California Continues to Whittle Away Non-Disclosure and Non-Disparagement Clauses in Employee Settlement and Separation Agreements

California, effective 2022, will prohibit employers from incorporating non-disclosure and non-disparagement clauses in agreements signed on or after Jan. 1, 2022 unless they allow employees to discuss or disclose information about unlawful acts in the workplace, including possible harassment, retaliation, and discrimination. The new law, SB 331, known as the “Silenced No More Act” (the “Act”), expands on the previously enacted Stand Together Against Non-Disclosure (“STAND”) Act and the definition of “information about unlawful acts in the workplace.” The Act impacts settlement agreements, employment agreements and separation agreements in several meaningful ways. In the next two months, employers of California workers should evaluate their existing agreement templates and any possible or pending cases to make sure they comply with the new law and assess whether this development affects the strategy, timing and outcome of any pending matters.

Impacts on Settlement Agreements

The 2018 STAND Act prohibits and invalidates provisions in settlement agreements preventing the disclosure of “factual information related to a claim” filed in court or in an administrative action for claims involving (1) certain acts of sexual assault, (2) sexual harassment, (3) workplace harassment or discrimination based on sex, (4) failure to prevent workplace harassment or discrimination based on sex, or (5) retaliation against a person for reporting harassment or discrimination based on sex.

The Silenced No More Act expands these prohibitions to confidentiality provisions in settlement agreements relating to the disclosure of underlying factual information relating to any type of workplace harassment, discrimination or retaliation, whether the protected characteristic is sex, age, national origin, race or others covered by California law.

While the new law does not prohibit provisions requiring confidentiality of settlement amounts or the protection of the claimant’s identity, any such provisions are subject to the same requirement to clarify what disclosures remain protected by law. Similarly, the Act does not restrict waivers, general releases of claims or nondisclosure language covering other legally-protectible information, such as trade secrets or sensitive business information, unrelated to unlawful acts in the workplace.

Impacts on Employment Agreements

The Act also prohibits employers from requiring California employees, as a condition of their employment, to enter non-disparagement or other contractual provisions that restrict the employee’s ability to disclose information relating to workplace conditions and other unlawful acts in the workplace. The new law only permits employers to include this type of restriction if the applicable agreement includes specific language that the disclosure is protected by law. Specifically, employment agreements must now include a provision stating that “[n]othing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”

Impacts on Separation Agreements

The new law also mandates these provisions for employees separating from employment and includes a major change to any separation agreement entered in California. Going forward, California employers who offer employees agreements relating to their separation must notify the employee or former employee of the right to consult with an attorney and provide a period of at least five business days to consult with the attorney. This obligation exists regardless of the employee’s age, unlike the federal Older Worker Benefit Protection Act, which requires a 21-day consideration period to waive a claim under the Age Discrimination in Employment Act for individuals aged 40 and above.

Employer Action Items and Considerations

Employers with employees in California should evaluate any pending or active workplace claims to assess how the new law may affect their possible litigation strategy before and after Jan. 1, 2022. More broadly, employers should evaluate their employment, separation and settlement agreement templates and forms to ensure they are updated and compliant with the Act.

Copyright ©2021 Nelson Mullins Riley & Scarborough LLPNational Law Review, Volume XI, Number 299
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Mitch Boyarsky Attorney Labor Employment Nelson Mullins New York
Partner

Mitch Boyarsky focuses his practice on labor and employment. He advises clients in a variety of workplace subjects, particularly focused on restrictive covenant, wage and hour, executive contracts matters, transactional employment matters especially related to mergers and acquisitions, disability law compliance measures, and related employment litigation. For more than 25 years, he has represented management in workplace law. Mr. Boyarsky often litigates matters in federal and state court, especially in New Jersey and New York. Such litigations involve alleged employment discrimination,...

646-428-2619
P. John Veysey Employment Attorney Nelson Mullins Boston
Associate

John maintains a national practice focused primarily on business litigation and labor and employment law. He has experience litigating complex matters in state, federal, and MDL venues throughout the country, including at trial, mediation, arbitration, and before administrative bodies. John represents and advises Fortune 500 companies, private and publicly held corporations, manufacturers, individual executives, and numerous other technology, financial services, healthcare, investment banking, private equity, insurance, media, energy, food, travel, hospitality, and...

617-217-4645
Nick Ladin-Sienne Employment Attorney Nelson Mullins Law Firm
Associate

As a former professional chef, Nick serves his clients with the highest standards and a sense of hospitality. He uses his knowledge of his clients’ industries to provide solutions that complement their business goals. In contentious times, Nick helps clients navigate internal investigations and complaints, litigate current disputes, and make informed decisions on future policies and actions. 

In advising clients, Nick provides efficient and effective answers to legal questions and guidance on risk management. Whether it’s an employee making a...

617-217-4614
Advertisement
Advertisement
Advertisement