Proposed California law to further limit settlement confidentiality
During May of 2021, the California Senate passed a law further prohibiting the use of broad confidentiality and nondisparagement provisions in agreements between a company and its employees. The new law expands on a 2018 law inspired by the #metoo movement, which banned settlement agreements preventing an employee from disclosing facts underlying claims for sexual harassment, or information about unlawful sexual harassment in the workplace. Now, Senate Bill 331, also known as the “Silenced No More Act,” aims to severely limit confidentiality and nondisparagement agreements arising out of any claim for harassment (not just sexual harassment) or discrimination in the workplace.
Specifically, SB 331 proposes to amend California Code of Civil Procedure section 1001 to invalidate any settlement agreements which restrict disclosure of any acts of workplace harassment or discrimination—or retaliation for reporting or opposing either. Like its 2018 predecessor, the bill would not prohibit keeping the identity of the victim or settlement amount confidential. SB 331 also seeks to amend the Fair Employment and Housing Act (California’s version of Title VII) to prohibit employers from requiring employees to sign a preemptive release for any claims arising under that section, or from signing a nondisparagement agreement (either during employment or when employment is terminated) preventing the employee from disclosing unlawful harassment, discrimination, or retaliation in the workplace.
Such confidentiality and nondisparagement provisions are frequently used not only in settlement agreements, but also in employment policy handbooks. These agreements may be construed, at least in part, to prevent current and former employees from disclosing details about workplace conduct through social media platforms. If passed, SB 331 will essentially end such prohibitions, whether in agreements or through employment policies. As with seemingly all new California labor laws, SB 331 would require a significant revamping of employment policies (including social media policies), and onboarding and termination documents.
The bill is currently in committee in the California assembly.