California Enacts Expanded Restrictions on Confidentiality Provisions
Governor Newsom has signed SB 331 (the “Silenced No More Act”) into law. As discussed in our prior blog post, SB 331 will expand the existing restrictions on the confidentiality provisions recently put into place by SB 820 (which restricts the usage of confidentiality provisions in agreements related to sexual assault, harassment, or harassment) to also restrict the usage of confidentiality provisions related to all claims of harassment, discrimination, or retaliation under the FEHA.
The new law takes effect on January 1, 2022. The key provisions that we believe California employers should review more carefully are listed below. Moving forward, California employers should also review their settlement agreements and related protocols carefully in advance of the law’s effective date to ensure compliance and best practice.
Expanded Restrictions on Confidentiality
The parties to a settlement agreement may not prevent or restrict an individual from disclosing the underlying factual information relating to all claims of harassment, discrimination, or retaliation under the FEHA, including but not limited to claims based on race, sexual orientation, religion, color, national origin, ancestry, disability, medical condition, and age. As noted above, this restriction builds upon and expands SB 820, which initially prohibited settlement agreements relating to claims based on sex.
Expanded Restrictions on Non-Disparagement Provision
An employer cannot require an employee to sign a non-disparagement agreement that has the purpose or effect of denying the employee the right to disclose information about unlawful acts in the workplace.
In addition, if an agreement includes a non-disparagement provision, the agreement must also include, “in substantial form,” the following language: “Nothing 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.”
Expanded Restrictions on Severance Agreements
A severance agreement may not prohibit a separated employee from disclosing information about unlawful workplace acts unless (1) the provision is part of a settlement agreement to resolve an employment discrimination-related claim that the employee has filed in court, “before an administrative agency, in an alternative dispute resolution forum, or through an employer’s internal complaint process,” and, (2) “the employee [was] given notice and an opportunity to retain an attorney or [was] represented by an attorney.”
In addition, an employer must give an employee or former employee at least five days to consider a severance agreement the employer offers the employee.
The employer also must notify an employee or former employee to whom the employer offers a severance agreement that the employee has the right to consult an attorney regarding the severance agreement.
Lastly, SB 331 clarifies that a severance agreement may (1) include a “general release or waiver of all claims,” (2) prohibit the disclosure of “trade secrets, proprietary information, or confidential information that does not involve unlawful acts in the workplace,” and/or (3) require that the amount of the severance paid remain confidential.
Timothy Kim contributed to this article.