Legislators Continue to Crack Down on Confidentiality
Guaranteed confidentiality with regard to employee disputes may be becoming a thing of the past if the current tide of legislation continues. As we blogged about several weeks ago, Congress just banned arbitration agreements for sexual harassment claims. Even more stringent than that new federal legislation, Washington and California have both recently passed a “Silenced No More Act,” which restricts confidentiality provisions in certain employment agreements.
The new Washington law bars employers of Washington residents from using non-disclosure and non-disparagement provisions in any agreements to prohibit employees from discussing instances of harassment, discrimination, retaliation, and wage-and-hour violations. Not only can employers not attempt to enter into agreements with such provisions, but they also cannot enforce such provisions in agreements that have already been executed. Employers may, however, continue requiring confidentiality as to the amount of a settlement (even when related to these categories of claims), and they may also continue using confidentiality provisions to protect proprietary company information. The law contains an anti-retaliation provision and recognizes a civil cause of action for aggrieved employees to collect damages of $10,000 or more, as well as attorneys’ fees, for an employer’s violation of the statute.
California’s version of the Silenced No More Act (SB 331) amends the state Fair Employment and Housing Act, which — following the “Me Too” movement — already prohibited settlement agreements preventing the disclosure of information related to claims of sexual harassment, sexual assault, sex discrimination, or alleged retaliation related to complaints about sex discrimination. SB 331 clarifies that agreements cannot restrict an employee’s disclosure of information related to claims of sexual harassment, assault, discrimination, or retaliation. More broadly, agreements entered on or after January 1, 2022, cannot prohibit disclosure of allegations of harassment or discrimination based on any protected category, not just sex. As with the Washington law, SB 331 allows for confidentiality of the settlement amount and of other proprietary company information. SB 331 also specifies that a claimant’s identity may remain confidential if he or she prefers.
SB 331 contains certain additional parameters that do not apply to negotiated settlements of claims filed in court or with an administrative agency, or else submitted through an internal workplace complaint procedure. So, if you are entering employment agreements, separation agreements, or other general agreements with current employees, you need to consider the following from SB 331:
You cannot require the release of claims or rights under SB 331 in exchange for a raise or bonus, or as a condition of employment or continued employment.
You must now include the following language in any agreement that restricts an employee’s ability to disclose information: “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.”
For separation agreements, you must disclose that the departing employee has the right to consult an attorney before signing an agreement, and must allow at least five days to consider the agreement before executing it.
If you have employees in California or Washington, you should revisit your template settlement agreements and ensure you are not about to run afoul of these new laws. Additionally, employers nationwide should take inventory of their arbitration agreements in light of the new federal law, and keep an antenna up in case additional “Silenced No More” legislation crops up in other states.