California Further Limits NDAs and Settlement Agreement Terms in Employment Cases
Governor Newsom signed Senate Bill 331 (SB 331), which further limits the use of non-disclosure agreements (NDAs) and settlement agreement terms when settling employment legal claims involving harassment, discrimination, or retaliation.
Before the passage of SB 331, California’s restriction was limited to sex-related claims. Specifically, since 2019 when SB 820 went into effect, California law prohibited a settlement agreement from preventing the disclosure of factual information regarding a claim in a civil or administrative action alleging sexual assault, sexual harassment, or an act of workplace harassment or discrimination based on sex.
SB 331 expands this prohibition to include other acts of workplace harassment or discrimination that are not based on sex. The bill also requires that any non-disparagement or other contractual provision that restricts an employee’s ability to disclose information related to the conditions of the workplace must include specific language related to the employee’s right to disclose information about unlawful acts in the workplace.
Note this bill is not retroactive and applies to agreements entered into on or after January 1, 2022.